Morgan lands pounds 100m from Redrow sale

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The Independent Online
Steve Morgan, one of Britain's richest individuals, is set to raise almost pounds 100m through the sale of a 25 per cent stake in Redrow, the housebuilder he founded in 1974 with a pounds 5,000 loan from his father.

Mr Morgan said the main purpose of the sale was for family investment reasons. He denied it was linked to his move last year to Jersey for personal tax reasons even though he will avoid a capital gains bill of up to pounds 40m on the deal because of the Channel Island's generous tax regime.

"There is no tax gain to be made by selling now," he insisted. "The business has come on greatly in the last 12 months and I feel it is not really appropriate for one shareholder to own more than 50 per cent of a public company."

The sale will see Mr Morgan's stake in Redrow, held via his Bridgemere Holdings company, cut from just under 60 per cent to about 35 per cent. Some 54 million shares will be placed by stockbrokers BZW and Cazenove with institutional investors.

Shares in Redrow fell 5.5p to 169.5p on the news, valuing Mr Morgan's total investment at pounds 220m.

Mr Morgan, who floated Clwyd-based Redrow on the stock market in 1994, stressed that neither the share sale nor his move to Jersey reduced his commitment to Redrow, of which he remains chairman.

"I wanted to sell more at the time of the float in May 1994, but conditions in the housebuilding industry then did not really allow it," he added.

Day-to-day running of Redrow is in the hands of Paul Pedley, managing director, who is also selling a small parcel of 475,000 shares, worth pounds 805,000 at last night's close

News of Mr Morgan's share sale came as Redrow released interim figures for the six months to December showing a 36 per cent rise in pre-tax profits to pounds 16.4m on sales 29 per cent ahead at pounds 123m. Earnings per share rose from 3.9p to 5.2p while the interim dividend was raised from 1.1 to 1.2p. Housing completions totalled 1,317 units in the half, up from 1,082, with the average selling price rising more than 5 per cent to pounds 93,200, mainly reflecting an increase in the average size of house sold.

Mr Morgan noted that although house price inflation had been strongest in the South-east, a ripple effect was now being seen across the country. "As a result there is every reason to believe the current market is sustainable," he said.

Mr Morgan is credited as one of the few housebuilders who called the top of the market in 1988 and 1989, selling the company's entire landbank before the recession and the housing crash hit the whole sector in the early 1990s.

Four years ago he returned to the market with the purchase of Costain Homes for pounds 70m, which expanded Redrow from its base in the North-west of England into the South-east.

Mr Morgan denied his well-publicised move to Jersey, where he reportedly paid pounds 6.5m to buy the Trinity Manor estate, was linked to fears that an incoming Labour government would increase the top rate of income tax. "I'm not a political animal," he maintained.