Berkeley Group is to raise £50m of new equity to increase its firepower.
The housebuilder, headed by Tony Pidgley, is selling 6m new shares through a placing that is underwritten by UBS. The new money will boost Berkeley's war chest to more than £300m. It has no debt.
'The current market weakness presents exceptional value creation opportunities for strong businesses with a clear strategy and experienced management teams with a track record of delivery,' the company said.
'For Berkeley, this means acquiring land opportunities at the right prices and using its added value developer expertise to optimise these sites and so enhance value for shareholders.'
Berkeley has consequently scrapped its strategy to return a large amount of money to shareholders.
The company agreed with its shareholders last June to defer the final £3 a share payable until
2014 so that it could invest in land. Since then the market has deteriorated and created uncertainty for Berkeley as to future cash flow and profit.
In light of these factors, the company said it was 'no longer appropriate' to both buy new land and commit to return £3 to shareholders by 2014. It will, therefore, return to 'a more traditional dividend policy'.