Dash for emergency cash provokes fund industry backlash

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As companies pull the emergency cash cord to help them through the coronavirus crisis, shareholders have been split by an easing of the rules to ...

As companies pull the emergency cash cord to help them through the coronavirus crisis, shareholders have been split by an easing of the rules to make it easier for them to turn to investors with the deepest pockets.

These allow companies to skip the conventions of investor roadshows, the publication of detailed prospectuses and so-called pre-emption rights, which bestow equal rights on all shareholders to participate in any capital increase. "We wanted to get it over and done with, get the issue knocked on the head so the company could stand its corner."

Mould describes dilution as"the enemy of the investor", as it lessens their share of a company's future profits. "Companies shouldn't, especially if your share price has been hammered, necessarily think of equity as the first solution," Piers Coombs, head of the London office at investment bank Goodbody, told Reuters.

 

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