Cash-strapped companies to ask shareholders for more funding

Builders, retailers and banks target shareholders

Dozens of British companies are set to launch new rights issues over the coming weeks in an attempt to pay down their debts and repair their cash-starved balance sheets.

Hammerson, the UK property company which was behind the recent redevelopment of Birmingham's Bullring shopping centre, is expected to kick off the current round of fund-raising today, unveiling plans to tap its shareholders for around £600m. British Land, another property group, is also considering launching a rights issue of around £500m – and may make an announcement when it publishes its third-quarter results on Thursday.

Property companies have run into acute funding difficulties over the last few months, as the value of offices, shops and warehouses has plummeted. A new report published by the Royal Institution of Chartered Surveyors today reveals that more than 70 per cent of surveyors saw a fall in demand for commercial property in the final quarter of last year, with the retail sector being the worst hit.

Hammerson's rights issue is to be underwritten by Citigroup and Deutsche Bank, which are believed to have already begun sounding investors out about the fund-raising initiative.

It is thought that a number of quoted property companies will be forced to raise new capital over the coming months. According to a recent research note issued by Morgan Stanley, Brixton, Liberty International and Slough Estates will all need to raise new funds if they are to be able to sustain a further 10 per cent fall in commercial property values. The note also suggests that British Land would need to raise more than £800m to protect itself against such a fall in values – although it is not believed the company is considering a rights issue of this size at the moment. Workspace, another commercial group, raised close to £900m last month, while the homebuilder Barratt Developments is believed to be currently considering a rights issue as well.

Oliver Gilmartin, the senior economist at Rics, said it was likely that there would be a further weakening in the market over the coming months. "Concerns as to the depth and duration of the current downturn are being reflected in the commercial property market where investment has been dramatically scaled back," he said. "New Government packages such as loan guarantee schemes and the separation out of toxic assets are welcome developments for both corporate occupiers and investors into commercial property, although they will not prevent a further near-term weakening in rental prospects on rising space."

He added, however, that the collapse in sterling could help spark interest from investors in continental Europe, which may help the market begin a recovery in the second half of the year.

Equity fund-raisings will not be limited to the property sector over the coming months, however. Businesses across all sectors are suffering from the shortage of credit, and are being left with no option but to ask shareholders to stump up extra cash. DSG International, which owns Currys Digital and PC World, is believed to be considering a rights issue of several hundred million pounds. Banking giant HSBC, private equity group 3i, plumbing company Wolseley, mining group Rio Tinto and food business Dairy Crest are among a long list of other businesses believed to be weighing up plans to launch rights issues in coming months.

As well as Workspace's £872m fund-raising, both Xstrata, the mining group, and Cookson, the ceramics to precious metals business, launched rights issues in January, looking to raise $5.9bn (£4bn) and £240m respectively.

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor