Sinking Companies Around The World Have Only One Chance To Be Saved
All over the world, "sinking" companies that urgently need to raise new funds have only one last salvation. According to Bloomberg, the last chance is to attract sovereign funds from different countries.
The article notes that this approach still carries a large share of risks: attracting sovereign funds puts pressure on stock prices.
The Agency cites the example of three major UK companies that are actively looking for new investors: the car company Rolls-Royce, the operator of shopping centers Unibail-Rodamco-Westfield, and IAG, as well as the main owner of British Airways.
All three major corporations faced serious financial problems during the global coronavirus pandemic. The top management of all three companies had to enter the capital markets.
The sharp drop in stock markets around the world, as well as any announcement by companies about attracting new investors and placing additional securities on exchanges, played into the hands of only hedge funds: they are the primary beneficiaries of the decline in quotations. such structures benefit from the negative news background around the company and conduct share buybacks on the market. The goal is to return previously borrowed securities to brokers.
The Agency notes that raising additional funds often leads to new problems. A way out of this situation may be the sale of a new issue of shares to sovereign funds: they use budget revenues on behalf of governments of different countries to invest.
Bloomberg writes that IAG has already sold 25% of its shares to the Qatar Foundation, receiving 2.7 billion euros for them. The Agency names the Singapore GIC Fund as one of the applicants for the additional issue of Rolls-Royce.