Redrow boss plots £80m fundraising

REDROW boss Steve Morgan wants to increase his stake in the housebuilder as it attempts to raise nearly £80 million to fund expansion.

Morgan, who also owns Wolverhampton Wanderers, founded Redrow in 1974 and returned three years ago as it struggled through the recession.

Speaking as the firm announced a further pick up in reservations in the year to date, he said his strategy to return Redrow to its family home-building roots had made “good progress” and it was time to accelerate the recovery, taking advantage of the development opportunities afforded by the addition of 3,000 plots with planning permission and £50m of new sites.

“There are an increasing number of land opportunities and as such we are looking to raise further capital to enable us to take advantage of these opportunities as they arise,” he said.

Morgan owns 29.9 per cent of Redrow, and, depending on the take-up of the open part of the share placing, that could increase to as much as 42 per cent. He will therefore need the backing of shareholders to waive his obligation to make an offer for the company once his stake passes 30 per cent.

The announcement came as Redrow, which sold its Scottish business to Springfield last year, posted a 2 per cent like-for-like increase in private reservations in the 16 weeks to 20 April. Average selling prices also rose, but it said the UK government’s NewBuy initiative to boost the market in England and Wales had made a slow start.

Morgan is offering to buy the new shares at 130p, a premium over Monday’s closing price of 117p.

Yesterday Redrow’s shares enjoyed a significant lift, adding more than 7 per cent to 126p, but analysts were not convinced by the offer.

In a “sell” note, Robin Hardy, at Peel Hunt, said that raising money at a premium on the back of a strong sector run and into “visibly tougher markets” was a bold move.