Rights issues of a combined worth of around £3bn have been flagged from Hammerson PLC (LON:HMSO) today and International Consolidated Airlines Group PLC (LON:IAG) on Friday indicates the stock market continues to see bargains even in the most troubled of industries.
IAG, the owner of airlines from British Airways and Iberia to Vueling and Aer Lingus, is looking to drum up €2.75bn to give it breathing space after reporting losses of more than €4bn for the first half of the year and saying it will take at least two and a half years for passenger demand to recover to pre-pandemic levels.
Following speculation over the weekend, shopping centre owner Hammerson confirmed it is mulling a rights issue too, though it did not say how big, as well as looking for a buyer for its stake in joint venture Via Outlets.
The owner of the Bullring and Brent Cross shopping centres is reported to be looking at a £500mln-600mln discounted equity raise, but with the retail property sector ravaged even before the coronavirus outbreak.
These two fundraisings would take the total potential fundraisings since March to above £19bn, according to data amassed with the help of AJ Bell, which includes more than £4.5bn that has been indicated but where final details are still awaited, including IAG and Hammerson.
After 34 firms raised just under £1.1bn in March, this was topped by the £3.25bn drummed up in April from a total of 64 companies.
May was the biggest month of the year in terms of funds raised, with £6.3bn raised from 51 companies, dropping down to £4.7bn in June from 58 companies, according to the AJ Bell stats.
Until IAG’s announcement, July saw 25 companies raise £800mln.
While this suggests a waning trend, the UK job retention scheme is due to be curtailed later this month, with companies will be asked to cover about a quarter of the 80% government subsidy, before the government’s furlough support comes to a close in October.
The Treasury confirmed in May that around 1mln companies have furloughed 8.4mln jobs, at a cost to the state of around £15bn.
With only a fifth of companies claiming they will be able to afford to provide the 20% contribution of workers’ full-time salaries between August and October, this could bring many more companies to the market with the begging bowl in coming months.