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.

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
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

Accounts Payable

£12 - £15 per hour: Cameron Kennedy Recruitment: Excellent opportunity to join...

Technical BA - Banking - Bristol - £400pd

£400 per hour: Orgtel: Technical Business Analyst - Banking - Bristol - £400pd...

Account Management Strategy Manager

£38000 - £42000 per annum + competitive: Real Staffing: Required skills:Previo...

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice