UK fundraising hits ten-year high as listed companies scramble for cash
Fundraising by London-listed businesses reached its highest level in a decade last year as the pandemic drove companies to raise money on public markets.
2020 saw the value of secondary equity raisings on the London Stock Exchange nearly double from £14.5bn in 2019 to £8.8bn in 2020, according to new research by Pinsent Masons.
In recent years listed firms in the UK have relied less on the public markets with private equity firms often considered a more attractive option.
But as companies were faced with the global coronavirus outbreak they looked to the public markets to quickly plug the hole in their balance sheets. At the beginning of the pandemic, private equity and venture capital firms were often slow to supply capital as they looked inwards to their portfolio companies.
“London listed companies of all sizes were able to tap institutional investors quickly for the capital they needed to get through the pandemic,” Pinsent Masons partner Julian Stanier said. “A lot of these fundraisings were done in near record time.”
This was helped by the loosening of measures by the regulator to help firms raise cash quickly during the pandemic, as lockdown measures made it harder to obtain shareholder approval.
Pinsent Masons research shows that the embattled travel and leisure sector saw the highest value of fundraising on markets, raising £4.1bn compared to just £16m in 2019.
Some of London’s biggest fundraisings were in the sector, including British Airways owner IAG’s £2.1bn rights issue in OCtober and Whitbread’s £1bn raise in May.
Aside from securing their financial positions, secondary fundraisings also allowed listed businesses to raise capital for acquisitions. Paddy Power owner Flutter Entertainment’s £1.1bn placing in December funded an increased stake in US esports provider Fanduel.