Stock buybacks twice as likely as new issues

UK listed companies returned twice as much money to shareholders through share buybacks in 2012 as they raised in new capital, according to figures released today.

Last year businesses spent £12.4bn buying back and cancelling their own shares compared to the £5.9bn they raised from the stock market through IPOs and rights issues.

“The imbalance suggests that companies do not see enough investment opportunities to justify keeping hold of cash let alone raising new cash from shareholders,” said Laurence Sacker of accountancy group UHY Hacker Young.

“A narrowing of that gap would be an important indicator that the market is starting to fire on all cylinders and returning to its crucial function of funding future growth.”

The British IPO market was stagnant for most of last year, with Direct Line’s successful float in October accounting for more than a tenth of total annual funds raised through share issues.

By contrast, in 2009 just £593m was returned to investors through buy-back schemes, while companies raised £76.7bn.