Grainger raises £209m to fund growth

Grainger plc raises £209m to fund its established growth strategy, which includes new schemes and acquisitions.

No. 1 St James Square Build to Rent scheme in Derby - one of Grainger's schemes that the Placing Proceeds will fund | BTR News
No. 1 St James Square in Derby - one scheme that the Placing Proceeds will fund.

Build to Rent landlord – Grainger plc – announces today that it has raised £209m to fund its established growth strategy following the successful completion of the placing announced yesterday – where the company proposed the placing announcement of approximately 67.38 million shares representing approximately 9.99% of the Company’s issued share capital. The proposed placing was expected to raise £216m – including additional debt of approximately £144m based on the company’s LTV target range.

Today, Grainger announced that a total of 67,379,369 new Ordinary Shares were placed by J.P. Morgan Cazenove and Numis Securities – raising gross proceeds of £209m. The Placing Shares have been issued at a price of 310 pence per Placing Share – representing a discount of 4.6% to the closing price on 1 September 2021 of 325 pence per Ordinary Share. The Placing was significantly oversubscribed with considerable support from existing shareholders.

As part of the Placing, Rob Hudson – the Company’s new Chief Financial Officer – acquired 112,900 Placing Shares in the Placing at the Issue Price. Following Admission, his resulting holding in the Company will represent 0.0% of the enlarged issued share capital of the Company (excluding shares held in treasury). 

“We are delighted with the support we have received from our shareholders. Grainger has a well-articulated growth strategy to further strengthen our nationwide PRS market leadership position with 10,000 homes and a further pipeline to almost double that. Our vision is to continue to provide high quality, mid-market, well located rental homes. This placing secures significant growth in net rental income and therefore dividend.”

Helen Gordon, Chief Executive Officer, Grainger

The Placing will enable Grainger to accelerate its growth strategy by bringing forward new schemes and adding new accretive acquisitions in its pipeline. The Placing Proceeds will be used to fund two recent acquisitions – Becketwell in Derby (targeted c.7% gross yield on cost) and The Forge in Newcastle (c.6.25% gross yield on cost), totaling £95m.

The Placing Proceeds will also be used to acquire at least two schemes within the Company’s Planning & Legals pipeline – which are being actively pursued and are under offer and nearing exchange. The Planning & Legals pipeline consists of two schemes located in London and the South East of England – comprising 580 homes and representing a total investment value of £202m and a blended average gross yield on cost of c.5.5%, and four schemes in Company-targeted regional cities comprising 925 homes and representing a total investment value of £226m – and a targeted gross yield on cost range of 6-7%.

The Placing Shares represent – in aggregate – approximately 9.99% of Grainger’s issued ordinary share capital prior to the Placing. When issued, The Placing Shares will be credited as fully paid and rank pari passu with the existing Ordinary Shares, including the right to receive all future dividends and distributions declared, made or paid.

Application has been made to the Financial Conduct Authority for admission of the 67,379,369 Placing Shares to the premium listing segment of the Official List maintained by the UK Listing Authority and to London Stock Exchange plc for admission to trading of the Placing Shares on LSE’s Main Market for listed securities (together, ‘Admission’). It’s expected that Admission will take place on 6 September 2021 and that dealings in the Placing Shares on the LSE’s Main Market for listed securities will commence at the same time.

Following Admission, Grainger’s issued share capital will be 741,196,149 Ordinary Shares with voting rights. The Company holds 1,506,300 Ordinary Shares in treasury. The Voting Rights figure may be used by shareholders in the company as the denominator for the calculations by which they will determine if they’re required to notify their interest in, or a change in their interest in, the share capital of the company under the FCA’s Disclosure Guidance and Transparency Rules.

The Placing is conditional, inter alia, upon Admission becoming effective and the Placing Agreement becoming unconditional and not being terminated.