Lend Lease Group is asking its shareholders for $806 million to top up its investment budget after turning in a strong profit performance in the half year to December 31.

With no further asset writedowns, the group's net reported profit for the half was $204.9m, in sharp contrast to a loss of $596.4m in the previous corresponding period.

However, chief executive Steve McCann said 2010-11 would remain a tough year, with improvement coming during the following financial year as some of its projects started to deliver returns. To prepare for future opportunities, Lend Lease launched an entitlement offer at $7.70 a security, a 15.8 per cent discount to the last traded price of $9.67.

Mr McCann said the initial feedback from institutional investors was "positive".

"The big discount in this market is a surprise," a Sydney-based fund manager said.

"Lend Lease is doing the capital raising to keep its BBB corporate rating, which gives it comparative advantage in bonding its projects and public private partnerships," said the manager. In response to the capital raising, Standard & Poor's and Moody's Investors Services, which placed the company on negative credit watch since December, affirmed Lend Lease's BBB rating and Baa3 respectively.

However, an institutional investor said Lend Lease should use more debt to generate growth.

Lend Lease's debt totalled $750m, or 9.2 per cent, at December 31.

Mr McCann said gearing was expected to reach 15 per cent in the next two years.

He said the company had won contracts with a total value of $12 billion in the past nine months and it had identified investments worth $1.6bn.

"We have to decide over the next six months whether to accelerate its new projects and to take bigger equity positions in these projects," he said.

Mr McCann said $1.8bn of its $2bn investment budget had been absorbed in recent acquisitions.

Source: The Australia