Tesco bolsters its corporate finance team

Jessica Morris
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Tesco is searching for an individual to head a small corporate finance team (Source: Getty)

Embattled Tesco is bolstering its corporate finance team, implying the retailer will take more moves to increase its cash position in the future.

The supermarket is reported to have headhunters searching for someone to lead a small corporate finance department, which would look at investment opportunities, portfolio reviews and mergers and acquisitions.

The new role would report to new chief executive Dave Lewis, finance director Alan Stewart and group strategy director Benny Higgins, according to a report by the Financial Times, citing unnamed sources.

Tesco, which is the UK's biggest supermarket, is widely expected to take steps to gut its bloated balance sheet. Credit ratings agency Standard & Poor's recently followed Moody's by slashing the supermarket's credit rating to junk, saying its cost-cutting efforts did not go far enough.

Despite this, not everyone is feeling quite so pessimistic. Broker JP Morgan recently upgraded Tesco to "overweight" from "equal weight". It said the market was underestimating Tesco's ability to improve its profit margins and it had the "sufficient firepower and self-help to improve meaningfully the competitiveness of its UK customer proposition".

Tesco's turnaround plan, which was unveiled earlier this month, included a number of measures to boost its cash position such as scrapping its dividend, cost-cutting and the sale of marketing arm Dunnhumby. New chief executive Dave Lewis also announced a new pricing strategy, a new UK boss and plans to sell off some assets.

This means we could see moves similar to the sale of music streaming service Blinkbox - which has been bought by Australian firm Guvera for an undisclosed sum.

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