Exclusive: BlackRock injects $18 billion into European firms during pandemic - source

LONDON (Reuters) - The world's biggest asset manager BlackRock BLK.N has pumped about 16 billion euros ($18 billion) into 810 European companies since the end of January, more than half of them in distress due to the coronavirus pandemic, a source with direct knowledge of the matter told Reuters.

FILE PHOTO: A sign for BlackRock Inc hangs above their building in New York U.S., July 16, 2018. To match Special Report USA-FUNDS/INDEX REUTERS/Lucas Jackson/File Photo

Companies across the world have looked to banks and asset managers to help provide emergency funding since the pandemic spurred most leading economies to lock down citizens in an effort to stop its spread, crippling many businesses.

Since the end of January, BlackRock had provided around 3 billion euros in equity and 13 billion euros in credit to new and existing investee companies, the source said, with just over half of the firms raising money after a big hit from the virus.

Of the capital deployed, around half went to companies in Britain, Europe’s biggest equity market.

Among the companies to receive fresh capital were cinema owner Everyman Media EMANE.L, with BlackRock buying 3.4 million shares in April to become its second biggest investor, according to regulatory filings and Refinitiv data.

Others included SSP Group SSPG.L, where BlackRock acquired 21 million shares in March to take its stake to 12.65%.

The share prices of many companies had risen since the capital injection, to the benefit of BlackRock’s clients, as liquidity fears eased, the source said.

“The positive impact of those investments in society and in local and national economies – in terms of supporting jobs, R&D, technology innovation and infrastructure rollout – is very significant,” said Rachel Lord, Head of EMEA at BlackRock.

BlackRock, which managed around $6.5 trillion in assets at the end of March for both retail and institutional clients, is a major investor in most of Europe’s leading stock markets, and the region’s biggest money manager by assets under management.

More than 100 firms had contacted BlackRock to sound out its willingness to take part in fundraisings, while more than 100 more had received pre-emptive calls from the asset manager to let them know the terms of potential support, the source said.

As lockdowns are lifted and companies get a better sense of changes in consumer spending, a second wave of equity fundraisings could come in the fourth quarter, the source added.

While companies often raise equity over several months, the emergency nature of many fundraisings meant many firms went to their biggest investors for help and completed deals quickly.

In Britain, this was helped by a rule change in March that enabled firms to raise up to 20% of their share capital in quick-fire share sales.

While investors including Schroders and Merian flagged their willingness to support such fundraisings, others criticised their dilutive impact on earnings per share.

Additional reporting by Abhinav Ramnarayan; Editing by Mark Potter