Resolution cash call breaks new ground

JUST weeks after two separate studies of rights issue fees were launched, Resolution revealed a £2bn cash call which will pay investors more commission than investment banks.

Total fees on the rights issue will come to 2.7 per cent, below the market average of 3.25 per cent. Shareholders, who agreed in advance to sub-underwrite more than half the deal, will get a generous cut of 1.75 per cent as a reward for taking risk.

After a planned share consolidation, investors will be offered 17 new shares for each ordinary share at a 38 per cent discount to the theoretical ex-rights price.

Josh Critchley, a banker at RBC Capital Markets, said it was “reasonable” to pay investors more if they agreed to back the call in advance.