Blue-chip firms in record rights issues in 2009

| December 30, 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 £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 £82.5 billion was raised through new and further issues of equity – a rise of 16% compared with a year ago and over £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 £13.5 billion from shareholders – which saw the world’s largest ever rights issue.

Banking giant HSBC raised £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 £1 billion was raised through initial public offerings (IPOs) in 2009, compared with more than £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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