Growth to fuel 2014 jump in UK company cash calls - study

Sun Dec 8, 2013 7:01pm EST

Related Topics

* 2013 total cash raised to exceed 11 billion pounds

* To hit 15 billion in 2014 as firms seek to expand

* Vodafone special dividend may act as a catalyst

By Simon Jessop

LONDON, Dec 9 (Reuters) - The number of UK companies that ask shareholders for more money is set to rise by almost a third in 2014 as a brighter economic outlook encourages more firms to expand their operations.

That continues a trend seen this year, a study by Capita Asset Services found, with the number of so-called 'cash calls' at the highest level since 2010, when most such requests were from banks looking to plug holes in their balance sheets.

A total of 10.2 billion pounds ($16.7 billion) was raised in the first three quarters of 2013, more than twice as much as in 2011 and 2012 combined. The 56 instances of firms raising capital this year is higher than in any year since 2009.

Capita AS said it expected the capital raised in 2014 to rise 29 percent.

"On present trends, around 11.6 billion pounds will be raised by the end of 2013, the highest annual total since 2009. But 2014 should see the amount of capital raised climb by almost a third to 15 billion pounds as companies act on improving demand and target growth," the report said.

While a recent 6 billion pounds rights issue by Barclays showed some companies were still in the market for "rescue cash", more were asking for a positive reason, Capita AS added. It cited British Land's 493 million pound share placement in the first quarter to fund growth plans.

While many firms have the necessary cash to expand, others may look for fresh funds from investment managers who are expected to have money to invest after FTSE 100 heavyweight Vodafone pays out a planned dividend.

"While many FTSE 100 firms will fund further investment and expansion from the 166 billion pound cash pile they are sitting on, an improved economic outlook, combined with Vodafone's record special dividend should bolster activity in 2014," said Capita Asset Services' Justin Cooper.

Vodafone is due to return $23.9 billion in cash, raised through the sale of its stake in Verizon Wireless to its U.S. joint venture partner, Verizon Communications, to shareholders sometime in early 2014.

"We expect companies planning to raise capital will cluster their issues around the payout, to target retail and institutional investors looking to reinvest the windfall," he added.

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