UK listed companies have raised £24.7bn new capital from investors in a strong second year of cash calls, as firms spent another twelve months prioritising their Covid recovery.
FTSE companies raised more than £12bn of that in the second half of the year to November, as record low interest rates saw investors more willing to put their money behind companies that are scrambling to recover and resume growth post-Covid.
So far this year, capital raising is just behind 2020, when corporates turned en masse to their investors to rebuild balance sheets and capitalise on opportunistic growth opportunities – in what sent capital raising to £34.4bn, its highest level in a decade.
Analysis of London Stock Exchange data on follow-on issues from investment bank Goodbody shows that in 202 companies raised new capital in the second half of 2021.
Capital raising on London’s Alternative Investment Market (AIM) has been particularly strong, with £6.3bn raised in the year to date – the highest level since 2007.
In terms of sectors, businesses in the consumer discretionary industry – i.e., cars, household goods, travel and leisure – raised the most capital, at more than £5.5bn in the year to date.
This was followed by the real estate sector, which raised £2.9bn, and financials, which raised £2.5bn.
As the travel industry continues to be negatively impacted by restrictions and ongoing uncertainty, several companies have turned to capital markets multiple times in the last 18 months, equating to £2.5bn new capital raised in the second half of this year, comprised of some of the largest placings of the year.
This included EasyJet’s £1.2 billion rights issue, designed to help fund its recovery from the pandemic.
But in the less Covid-afflicted tech sector, FTSE businesses raised a total of £1.6bn in follow-on capital, often to fund growth strategies or acquisitions in the face of rising consumer demand, rather than restore a broken balance sheet.
In October, for example, online security specialist Kape Technologies, raised more than £250m in an oversubscribed placing to facilitate its acquisition of ExpressVPN.
“Two years into the pandemic, capital raising from UK-listed corporates continues at record pace,” said Piers Coombs, Head of Goodbody’s London office.
“Whether sectors have been negatively impacted by the pandemic or have started to see green shoots of new opportunity in the past 12 months, the backing of investors has been invaluable to UK’s listed companies and their management teams.
“This is likely to continue in the face of ongoing COVID-19 variants and we can expect capital markets activity to continue to operate above pre-pandemic levels in the coming year.”