Homebuilder Glenveagh Properties is approaching a market value of €1 billion on foot of its move to sell €213 million of new shares at an almost 7 per cent discount to Tuesday's closing price to fund further land purchases and development.
The company, which raised an initial €550 million through an initial public offering (IPO) last October, revealed that it was raising fresh equity after the Dublin market closed on Tuesday.
It said in an update on Wednesday morning that it had agreed to place €85 million of stock with a group of institutional investors at €1.15 a piece. The company also plans to raise a further €128 million through an additional share placing and open offer to existing shareholders.
Shares in the company fell by almost 7 per cent in early trading to that level as the market priced in the discounted offer, giving it a market capitalisation of €767 million. The listing of the new shares, which is subject to shareholder approval at an extraordinary general meeting on August 13th, will boost the value of the company to near €1 billion, subject to the stock price remaining stable.
Rival Cairn Homes, which has raised €720 million in the past three years through its 2015 IPO and subsequent share sales, currently has a market value of €1.34 billion.
Meanwhile, Glenveagh's main shareholder, US private equity firm Oaktree, which rolled a number of its properties into the company as part of the IPO, has found buyers in the market for half of its stock – the equivalent of 8 per cent of the current amount of shares in circulation.
Oaktree’s stake will fall to about 6 per cent as a result of its shares disposal and the dilutive effect of Glenveagh’s capital raise.
Glenveagh has already deployed €404 million of the capital it raised in the IPO and said this week that it is working on a pipeline of site purchases valued at €65 million, while it is in talks on a further €361 million of land banks.
The company’s current land bank has the scope to deliver 10,120 houses and apartments, 31 per cent of which are shovel-ready and 97 per cent of which is zoned residential. As of late June, it had commenced work on 12 sites, with 700 residential units under construction.
"We see the move to increase the land bank as sensible, given the strength of the housing market, underpinned by a significant undersupply of homes and supportive Government measures," said Goodbody Stockbrokers analyst Sarah Stokes.
Glenveagh said that it expects more than €800 million of land to come up for sale over the next year.