FIRSTGROUP stock closed 19 per cent lower yesterday as the shares from its recently-announced £615m fundraising were admitted to the market – but the transport firm can look forward to growth beyond its balance sheet repair plan, according to one analyst.
The rights issue will conclude in a few weeks, and those working on the deal are optimistic of placing the shares with investors.
FirstGroup revealed the plan to raise cash and defend its investment-grade credit rating last month, following months of uncertainty over its rail business sparked by the collapse of the UK franchising process.
Chairman Martin Gilbert resigned when the fundraising was first announced.
Investors approved the plan with a 96.5 per cent vote in favour at a meeting on Monday.
Investec analyst John Lawson upgraded the firm yesterday, saying First is “on the verge of becoming an interesting equity investment again” following the rights issue, and he views the current share price dip as a good entry point.
“[I]nvestors should at long last begin to focus on the recovery story (especially in Student and UK Bus), instead of fretting about the group’s finances,” he said in a note to clients.
Meanwhile FirstGroup confirmed that finance director Chris Surch and several other top staff were awarded tens of thousands of shares each this week under its annual bonus plan. The awards will vest after three years.