Flurry of activity is breath of fresh air

Elizabeth Fournier

FOR two days in a row now the market has been surprised by late afternoon announcements from state-backed banks eager to pounce on the UK’s unrelentingly buoyant equity markets.

Add British Land’s fundraising plans to RBS and Lloyds’ opportunistic stake sales, and you’ve totted up around £1.5bn in fundraising in the past 24 hours alone – with more looking likely if Thomas Cook follows suit in the coming weeks.

The flurry of activity is a breath of fresh air against a gloomier backdrop of economic data from both the UK and its Eurozone neighbours, as companies open the window on equity capital markets that have been sluggish for too long.

After a relatively healthy start to the year that has seen Phoenix Group raise £250m and Ophir tap investors for a £550m, fears of a triple-dip recession in the UK and Eurozone instability have resurfaced – leaving firms uncertain just how long the markets will be sympathetic to their cash calls.

While RBS and Lloyds are understandably keen to shore up their balance sheets in the face of greater regulatory scrutiny, British Land’s placing has a more upbeat story to tell – the firm wants money to spend, and it wants to spend it on development projects in London.

A vote of confidence in the capital’s property sector from a bluechip landlord is a welcome fillip that goes beyond the capital markets, pumping much needed cash into projects that have the potential to create activity throughout the supply chain.

Bankers will be hoping that the chill winds threatening the wider economy don’t blow this window of opportunity shut anytime soon.

Elizabeth Fournier is News Editor of City A.M. @ej_fournier