Warehouse giant Segro has raised £900m from investors to invest in its pipeline of development projects.
Announced after markets closed on Tuesday, the company initially said it would be looking to raise £800m from investors, but due to “strong demand received both from existing investors and potential new holders”, the board decided to upsize the offer.
The offer has raised gross proceeds of £907m for the company, and at a price of 820p per share, represented a discount of 3.4 per cent to the closing price on the day the placing was announced.
A portion of the offer was made available to smaller investors via Primarybid – the second time Segro has used the platform’s technology to offer shares to smaller investors.
Segro said the proceeds of the issue will be used to fund its development pipeline. The company’s “sizeable development pipeline” will require £3.8bn of capital spending, a third of which is due to take place over the next three years. The spending has the potential to deliver £440m of additional rent for the group.
The developer added it expected to “commence infrastructure works of £350m to unlock future development opportunities”.
As part of its development work, Segro has identified 24 sites in the UK and Continental Europe, which have the potential to be transformed into data centres. It said the potential rental income from these sites “has the potential to triple the £50m headline rent currently attributed to this customer sector”. Its development programme includes “two pre-let data centres”.
While the development of the current pipeline will continue to be the focus for the group, it added that it will remain open to potential acquisitions that meet its “investment criteria in terms of returns, location and quality”.
Segro added: “Availability and cost of financing represents a challenge for many market participants, which provides Segro with a competitive advantage given its strong balance sheet, significant liquidity and its unsecured funding model.
“This is in addition to Segro’s other longstanding competitive advantages, including extensive in-country experience, a wide network of local stakeholder contacts and access to off-market transactions.”