UPDATE 1-Australia's AMP, Mirvac to raise $700mln in equity

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SYDNEY, Nov 5 (Reuters) - Australian fund manager AMP Ltd (AMP.AX) (AMP.NZ) and property investor Mirvac Group (MGR.AX) would raise a total of up to A$1 billion ($700 million) in equity as frozen credit markets force Australian firms to look at alternative funding sources.

AMP did not disclose the price at which its new shares would be sold to institutions, but said the retail investors would get shares at a 2.5 percent discount to the institutional placement price. Mirvac is selling shares at 90 cents each, a near 9 percent discount to its last traded price.

AMP and Mirvac join a growing list of companies, mostly from the battered property sector, to tap equity capital. Debt-laden real estate investment trusts are raising equity to lower debt, but AMP said its raising is aimed to benefit from growth opportunities arising from the current market turmoil.

While AMP said it was confident about the medium to long-term outlook for the wealth management industry, Mirvac cut its full year earnings forecast to 13.4 cents per security from 23-25 cents per security reflecting the tough market conditions faced by property trusts.

Mirvac would also sell some non-core funds and delay developments.

AMP said it had the option to raise subordinate debt, but it has deferred that option for the time being.

"As we outlined in August at our interim results presentation, our bias is to have more capital rather than less in these difficult market conditions," AMP's Chief Financial Officer Paul Leaming said in a statement.

AMP would have the capacity to raise up to A$500 million in subordinated debt after the institutional placement, which qualifies as Tier 2 capital.

AMP'would also hold A$740 million in surplus capital -- above the minimum regulatory requirement -- following the institutional capital raising.

AMP warned of volatile market conditions for the rest of 2008 and for 2009.

"As we outlined in August, our strategy is to prudently manage through these market conditions, while also continuing to invest where we see growth opportunities," Chief Executive Officer Craig Dunn said.

Both AMP and Mirvac shares were on trading halts pending the completion of the placements. ($1=A$1.43) (Reporting by Denny Thomas)