Balfour sees strong results

By Marc Roca

LONDON (Reuters) - Construction and engineering group Balfour Beatty raised 186 million pounds in a share placing on Thursday and said 2008 results should be at the top end of expectations.

The placing, which Balfour said was to support growth following acquisitions, weighed on its stock which fell more than 5 percent in early trading. By 1:38 p.m., the stock had pared losses to trade down 3 percent at 440 pence.

Balfour Beatty which was recently awarded the contract to build the 300 million pounds London Olympic Aquatics Centre, said it placed 43.3 million shares at 430 pence each with institutions. The placing increased its share capital almost 10 percent and was underwritten by JP Morgan Cazenove and Hoare Govett.

"The share placing will satisfy a lot of the immediate demand, so the share price may struggle to progress," Panmure Gordon analysts said.

"For a cash generative business like Balfour Beatty, the placing looks speculative, but it does suggest that further corporate newsflow is likely," they said.

The group's businesses include healthcare, education, transport, privately financed projects and social housing. It said the placing would strengthen its balance sheet and support both additional bolt-on acquisitions and organic growth.

"After seven or eight years of supporting growth with our own cash only, now it was the moment to strengthen our balance sheet following the completion of the $350.5 million (180.3 million pound) acquisition of GMH Military Housing in the U.S.," Chief Executive Ian Tyler told Reuters.

"We have two bolt-on acquisitions in the U.S. reasonably advanced at the moment," he said, adding that "one or two" minor disposals to raise more equity were also on the cards.