A manufacturer of electric vehicles is raising £5.5m to fund two deals to help it expand.

The Tanfield Group, which owns Smiths Electric Vehicles (SEV), is close to a deal with a well-known brand in the automotive industry. It is also poised to sign a second agreement with an unnamed national company.

Yesterday, the company announced it will fund the deals by conditionally placing 27,500,000 ordinary shares at 20p a share.

Roy Stanley, chief executive, said: "We are raising money to take advantage of some strategic opportunities that have presented themselves.

"We are looking at joint ventures, strategic alliances and possibly a new acquisition."

It is expected to make official announcements on the deals to the Stock Exchange next week.

The group, based on the Tanfield Lea North Industrial Estate, near Stanley, County Durham, made losses of £5.97m last year.

However, SEV has already won a string of contracts this year thanks to its latest high-performance model, due to be launched soon.

These included export deals for its aerial platforms and a contract to re-fit milk floats for a dairy.

It secured its first fleet contracts for airport baggage handling vehicles in February, supplying John Lennon Airport, in Liverpool, and Air Canada.

Along with SEV, Tanfield encompasses digital imaging firm e-comeleon, training company JoeKnowsIt, and engineering company Tanfield Holdings. It employs about 400 workers.

Shares in the group have doubled in value since last November.

The share placing is subject to the agreement of shareholders, who will vote at a meeting at the factory on May 20 at 11am.

Mr Stanley moved SEV from Gateshead to the Tanfield Lea Industrial Estate to take it closer to Tanfield Holdings. He is applying for funding to explore joint projects between the two companies.

The group bought Tanfield Holdings at the end of 2003.

Last September, it switched from being a sub-contractor, largely for automotive components, to more lucrative assembly and sub-assembly work.

The move has led to orders reaching a record £18m, compared to £7m at the beginning of last year.

e-comeleon has pulled out of manufacturing and left its Comeleon House headquarters on the Tanfield Lea Industrial Estate.