Housebuilder takes advantage of strong recent share performance to raise cash in rights issue
Housebuilder Bellway has this morning raised £45m with a share placing in order to take advantage of the unexpectedly strong performance of housebuilders in the stockmarket in recent months.
The firm placed 5.7 million new shares, equivalent to around 5% of its current issued capital, at 779p, a small discount to their current share price of 807p.
The £44.8m raising is more than enough to pay of Bellway’s remaining debts of £37m, but the firm said the cash would be used to make investments in land at the bottom of the market. The firm said in a trading update today that it had already made a number of land purchases and was actively looking for other sites.
Shares rose 3% on the news, which is viewed as likely to stave off the need for a larger cash raising later in the year. The firm has £370m of banking facilities to draw upon, with £290m available today.
The firm said: “The board believes that many of the group's traditional competitors in the land market are not present or are only present at a reduced level. The group is currently aware of a number of attractive opportunities to acquire land."
"The board believes that this growth should be financed through new equity and from drawing down under the group's available existing debt facilities.”
Kevin Cammack, analyst at Centros, said: “This is a relatively opportunistic move, there’s an element of surprise that they’ve done this, but looked at positively it means they’ve taken advantage of the market recovery and aren’t likely to have to follow this with a big equity raising process later in the year.”