Australian realtor Goodman group to raise A$1.8 billion

Australia's leading property developer, Goodman group plans to raise A$1.8 billion in order to improve its balance sheet and provide a stable platform for growth, the company announced yesterday.

The amount will be raised through issue of new shares worth A$1.3 billion and a separate issue of A$500 million in convertible debt to China Investment Corporation (CIC), a sovereign wealth fund having interest in Goodman.

The new shares will be offered to existing shareholders at A$0.40 per share, at the rate of one new share for every share held, raising an amount of A$1.1 billion. Additionally, the company plans to place A$167 million in new stock with institutional investors at the same price. The offer price is about 18 per cent discount to the last traded price of Goodman shares in Australian Securities Exchange.

Goodman chief executive Greg Goodman said the actions planned would secure the company's future growth. "The future looks very bright with all these plans being put in place," he said.

The equity injection will reduce the company's debt and provide sustainable capital structure. On conversion of its debt, CIC would hold around 18.2 per cent in the group, Goodman said.

The company also informed that it was forming a A$200 million joint venture with the Canada Pension Plan Investment Board (CPPIB) to follow property development opportunities in China. Goodman will have 20 per cent stake in the joint venture. The plan includes development of logistic assets as well as future plans for A$185 million development work on the land owned by Goodman in Shanghai.