More than 300 people have invested $5.4 million in a property company that is building a new private school.

Preliminary earthworks began yesterday on the Strathallan Campus near Karaka in South Auckland.

The campus will offer a preschool, and primary and secondary classes and is expected to cater for 1400 pupils by 2002.

It is believed to be the first school in New Zealand to be built from money raised through a public share float.

The 14ha site on the Hingaia Peninsula, between Papakura and Karaka, is owned by the charitable Strathallan Education Trust.

But the $27 million school will be built by Strathallan College Property Ltd, which raised $5.4 million within four weeks after issuing a share float last month.

Director Alex Findlay said the company was surprised to receive investments from areas well outside Auckland, including Tauranga, Gisborne, Balclutha and New Plymouth.

Since buying shares in a school was a first in New Zealand, the company was not sure if people would invest.

"We expected the issue to be popular with people within Auckland but we are amazed with the response.

"People seem to have seen it as a very sound and socially ethical investment and the issue is growing daily," Mr Findlay said.

The first stage of the school, which will cater from preschoolers to Year 10 (fourth form) students, is due to open next year, with years 11-13 following in 2002.

Fees are expected to be $7500 a year for primary students and $8500 for secondary pupils.

Mr Findlay said 63 per cent of the fees revenue would be used to run the school, while 37 per cent would be reinvested in the property company.

That way, the company was forecasting returns of 10 per cent in 2001 and 2002, rising to 13.3 per cent in 2004.

The share float, open for a further six months, aims to raise $9.24 million.

The Academic Colleges Group will manage the school, meaning it will be run along similar lines to the group's existing colleges, including the Senior College of New Zealand.