Redrow to raise £80m in share issue

Optimism returning to the housing sector?

Housebuilder Redrow is to raise £80m in an issue of new shares to fund its expansion plans, in a sign of optimism for the sector.

Executive chairman Steve Morgan, who also owns Wolverhampton Wanderers FC, said there were significant growth opportunities in London and the regions.

Flintshire-based Redrow is offering the new shares at 130p each, an 11.1% premium to yesterday's close of 117p.

Mr Morgan founded Redrow in 1974.

Announcing the move, Mr Morgan said: "Redrow has made good progress under a strategy designed to return it to its roots, selling high-quality, differentiated family homes.

"We now believe the time is right to accelerate that strategy by taking advantage of the development opportunities we see."

The firm has secured planning on more than 3,000 plots and acquired new sites totalling £50m.

For the 16 weeks to 20 April, the average selling price of its properties was up 12% to £207,000 (excluding London) and up 20% to £223,000 (including London).

Mr Morgan must receive the backing of shareholders to waive his obligation to make a cash offer for the company if his stake exceeds 30%.