Arafura Rare Earths (ASX:ARU) has secured commitments to raise around AU$350 million through a two-tranche institutional placement of about 1.35 billion new shares priced at AU$0.26 each, according to a Monday filing with the Australian bourse.

Tranche one is expected to raise around AU$175.5 million, while tranche two is anticipated to raise about AU$174.5 million, subject to shareholder approval, per the filing.

The placement received strong backing from institutional investors, including Hancock Prospecting, which invested around AU$85 million and is expected to own about 18% of the company after completion, the filing said.

The company is also launching a share purchase plan targeting an additional AU$25 million at the same issue price as that of the placement, the filing added.