London Irish Holdings, the holding company for London Irish Rugby Club, is raising £2 million sterling (€3.26 million) in a share placing and is targeting a  flotation on London's Alternative Investment Market within the next 12-18 months. The placing values London Irish at around £7 million sterling.

Half of the money is coming from Powerscourt Capital Partners, a Dublin-based investment house headed by former rugby international and former stockbroker with Davy, Mr Brendan Mullin. Mr Mullin said that a small number of private individuals with an interest in rugby were involved in Powerscourt's half of the funding. He denied a London media report that Dr Tony Ryan was one of the investors.

Powerscourt is also underwriting half of the placing and open offer to existing London Irish shareholders although this underwriting is unlikely to be invoked as the share issue is expected to be oversubscribed. The £1 million investment from Powerscourt will give the new Irish investors just more than 14 per cent of London Irish Holdings and Mr Mullin will be joining the board of the holding company.

Currently, there are about 700 small shareholders while the former head of Ballygowan Spring Water, Mr Geoff Read, and some other investors have larger stakes after a private placing in 1997 raised £2.4 million sterling. Mr Read became chairman of London Irish but stepped down a few months ago and was replaced by Mr John Conlon.

Mr Mullin said that London Irish was a solid investment and made profits of £2 million last year and owned a valuable 18-acre site at Sunbury in west London which underpinned the investment in the company. But Mr Mullin said recent changes in the structure of rugby in England and the growth of the sport in Europe were other positive factors.

Last September, the English premiership rugby clubs made an agreement with the RFU which guaranteed the clubs a minimum income of £1.8 million, enough to cover the cost of player salaries which are subject to a cap. "That agreement covered the player costs, so the question was what can clubs like London Irish generate through sponsorship and attendances? Future television rights is seen as another part of the upside, The funds raised will be used to redevelop the club's training site and relocate its administrative offices closer to its home ground, the Madjeski Stadium in Reading. London Irish leases the stadium from Reading football club on its match days.