Smart Telecom yesterday raised €55.2 million from institutional investors to fund the group's further expansion.

The company - which is listed on the Alternative Investment Market (AIM) in London - issued 150 million shares at 30 cent each to over 20 financial institutions, which it said included a number of significant international players.

The issue raised €44.4 million. Smart also reached agreement with a number of its lenders that it would convert €10.8 million of existing debt into equity.

The debt-to-equity conversion will be at the issue price and will result in the company issuing over 37 million new shares. Chief executive Oisín Fanning increased his holding in the company from 3 per cent to 6 per cent in the course of the placing.

However, the issue has also resulted in a large number of new institutional shareholders joining the company's register.

The company will hold an extraordinary general meeting (egm) early next month. Assuming that shareholders approve all resolutions, the new stock will begin trading at that point.

Smart provides broadband and other telecoms services to businesses and domestic consumers, and is one of the biggest competitors of the Republic's dominant player, Eircom.

It announced its intention to raise the cash several weeks ago. In a statement yesterday, Smart said that it intended to use the money to fund the recruitment of new business and residential customers.

It will also spend it on a network expansion programme and use it to fund its ongoing capital expenditure needs.

Mr Fanning said that the fundraising would pay for the "aggressive roll-out" of Smart's corporate and domestic services in the Republic.

"This fundraising utterly transforms Smart Telecom's balance sheet and financial resources base," Mr Fanning said.