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 office.

"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 investors.

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 growth strategy.

Website: www.fnlondon.com

(END) Dow Jones Newswires

November 25, 2020 09:50 ET (14:50 GMT)

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