Finsbury Food has raised about £3.9m from a new share issue to fund spending on new machinery to improve efficiency.

The spending will be made on the cake side of the bakery business and is forecast to deliver annual savings of about £2m.

“We are really pleased with the support we have seen for the placing from both new and existing shareholders,” said Finsbury Food CEO John Duffy. “We are committed to investing in the company to build upon the foundations that are already in place and look forward to growing the business further over the coming years.”

The company added that trading in the first three months of the new financial year had been in line with expectations. It specified that sales growth was strong in the bread and free from division, offset by a small decline in the cake business.