Pandemic Spurs U.K. Companies to Tap London Equity Market at Fastest Pace in 11 Years -- Financial News
By Lina Saigol and Paul Clarke
Of Financial News
Capital raised by U.K.-listed companies has soared to its
highest level since 2009 as companies rush to tap equity markets to
tide them through the coronavirus pandemic.
Listed companies have raised more than 26 billion pounds ($34.74
billion) this year from London Stock Exchange main and junior AIM
markets, according to analysis by investment bank Goodbody.
This marks the highest total in 11 years. In total, 463
companies completed transactions to raise additional capital as
they were forced to shore up their balance sheets because of the
impact of Covid-19.
"In recent years, a rise of passive funds and a trend towards
de-equitization has taken the focus away from the vital role active
investor's play in keeping equity capital markets healthy for
listed companies," said Piers Coombs, head of Goodbody's London
"This year has firmly reversed that trend, and through
institutional and retail investors giving their backing to
companies at this difficult time, thousands of jobs have been
protected and businesses can plan for the future," he added.
The consumer discretionary sector, which include automobile,
consumer services, travel and leisure, saw the greatest value of
capital raised, with 70 companies raising a total of GBP11.4
billion in the period.
This included several of the largest deals of the year to date,
including Compass Group PLC, the FTSE 100 catering group, which
raised a total of GBP2 billion from both retail and institutional
Companies in the industrials sector, which includes aircraft
engine maker Rolls-Royce Holdings PLC, raised the second-biggest
amount at GBP4.2 billion as it looked to bolster its finances.
The financial sector saw 95 companies raise GBP3.9 billion.
In the travel and leisure sector alone--one of those hit hardest
by the pandemic amid an unprecedented slump in demand --30
companies have carried out equity issues, raising GBP5.5 billion,
including British Airways owner International Consolidated Airlines
Group SA, which raised GBP1.3 billion.
More recently in November, Mecca Bingo and Grosvenor Casinos
owner Rank Group PLC raised GBP70 million to give it enough
headroom to steer through the next stage of the pandemic.
"The sectors that have raised the most capital will come as no
surprise, as retail, travel and leisure businesses have all looked
to repair their balance sheets," Mr. Coombe said.
However, he noted that not all transactions have been limited to
those struggling to survive with companies--particularly those in
the fast-growth technology sector--raising capital to take
advantage of surging demand to grow their businesses.
Venture capital firm Draper Esprit PLC, for instance, raised a
further GBP110 million in October, highlighting investor demand for
the high-growth and pre-market technology companies the AIM-listed
company invests in.
In the video gaming sector, where social restrictions have
accelerated growth, Keywords Studios PLC raised GBP100 million in
May and was the first example of a listed company since the onset
of Covid-19 to raise equity for acquisitions, a key part of its
(END) Dow Jones Newswires
November 25, 2020 09:50 ET (14:50 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.