Morning:
8°c
Housebuilders Barratt Developments and Redrow today tapped the City for almost £900 million amid signs business is returning to levels not seen since Northern Rock's collapsed.
Barratt's £720.5 million fundraising is to pay off debts, build new houses and buy land, while rival Redrow went to shareholders for £156 million.
Commercial property firm Liberty International, which owns Covent Garden and shopping centres around the UK, added to the City fees bonanza with a £305 million share placing.
Barratt shares rose 7½p to 276p, and Redrow was up 6½p to 240p, but Liberty fell 19p to 545p.
Barratt chief executive Mark Clare said “stability in the housing market over the last eight months” convinced it to make the move.
The housing market fell off a cliff after Northern Rock's collapse, and took another hit when Lehman failed a year later.
Barratt today reported losses of £678.9 million for the 12 months to the end of June having made a profit of £137.3 million the previous year. Revenues fell 36% to £2.29 billion as sales and prices tumbled in what Clare described as “an intensely difficult year”.
The fundraising — £175 million through today's share placing at 240p and £545.5 million from a rights issue at 100p — was bigger than expected in the City and will further cut Barratt's debt from £1.28 billion to £700 million.
Barratt will get £693.5 million after paying fees and other costs. Redrow's more modest fees will leave it with £150 million.
Chairman Steve Morgan said the fully underwritten rights issue, priced at 105p a share, will reduce Redrow's debts from £425 million to £250 million and give it firepower to buy land.
