London Stock Exchange sees rights issue increase

Big rights issues are becoming more popular among companies struggling in the credit crunch, figures from the London Stock Exchange Group indicated today.

According to the organisation, it handled £29.5 billion of the share sales across January-March 2009, with a total of 454 rights issues launched by listed firms.

In January-March 2008, this total stood at just £1.9 billion.

Selling new shares is a popular way for firms to raise extra money in order to shore up their balance sheets.

Concerns regarding corporate financial positions have grown over recent months with the economic downturn and eventual recession - helping to explain the sharp increase in the cash calls.

Tracey Pierce, head of equity primary markets at the London Stock Exchange Group, said: ’These figures show that our markets have continued to perform a vital function in helping companies to raise equity finance.

’The capacity of the London markets to support this is partly due to a very high proportion of institutional investors, who develop long-term relationships with issuers, making it easier for companies both large and small to return to the market to access further capital.’

In all, the largest single rights issue handled over January-March was the £12.8 billion sale launched by London-listed HSBC.

This is also the biggest rights issue in UK corporate history.ADNFCR-2318-ID-19126178-ADNFCR