Housebuilder takes advantage of strong recent share performance to raise cash in rights issue

Housebuilder Bellway has this morning raised 拢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 拢44.8m raising is more than enough to pay of Bellway鈥檚 remaining debts of 拢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 拢370m of banking facilities to draw upon, with 拢290m available today.

The firm said: 鈥淭he 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.鈥�

Kevin Cammack, analyst at Centros, said: 鈥淭his is a relatively opportunistic move, there鈥檚 an element of surprise that they鈥檝e done this, but looked at positively it means they鈥檝e taken advantage of the market recovery and aren鈥檛 likely to have to follow this with a big equity raising process later in the year.鈥�

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