Blue-chip firms in record rights issues in 2009

Blue-chip firms in record rights issues in 2009

The FTSE 100 index closed at 5437.61 points yesterday – a level not seen since prior to the collapse of Lehman Brothers in September 2008.

However, in March this year, the index hit a 6-year low of 3,461 and despite the recent rally, it is still a long way off the 6,700 mark it reached prior to the dot-com crash at the start of the millennium.

Meanwhile, companies listed on the London Stock Exchange (LSE) have raised a record A?82.5 billion from investors this year.

Struggling housebuilders, such as Barratt, had to seek cash from investors to weather the housing market downturn.

A record A?82.5 billion was raised through new and further issues of equity – a rise of 16% compared with a year ago and over A?50 billion was raised through rights issues.

As well as housebuilders, banks raised a staggering amount this year and last month, Lloyds Banking Group raised A?13.5 billion from shareholders – which saw the world’s largest ever rights issue.

Banking giant HSBC raised A?12.5 billion from existing shareholders in March, while Royal Bank of Scotland tapped investors for cash to strengthen its balance sheet.

Meanwhile, just over A?1 billion was raised through initial public offerings (IPOs) in 2009, compared with more than A?20 billion in 2007

Commenting on the cash calls, Tracey Pierce, head of equity primary markets at the London Stock Exchange Group, said: “Our markets continued to support the capital-raising needs of companies across the year… providing firms with the backing they need to help them through testing market conditions.”

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