Debenhams clinches equity raise after share price spook
Debenhams Group successfully closed its equity fundraise above its initial £35m target despite a stock market spook which saw its shares drop by 20 per cent.
The fashion group, which recently rebranded from Boohoo Group, had pitched the equity raise as central to its turnaround from significant struggles in recent years.
Debenhams Group, which owns other brands including PrettyLittleThing and Karen Millen, announced the plans on Tuesday morning to counter “speculation” around the company’s health.
While the fundraising plans caused immediate stock market jitters, the group on Thursday announced it had surpassed its initial target, which the board said was a vote of confidence in its recovery plans.
Interest in the shares, which were offered at a discounted rate of 18 pence, pushed Debenhams to upscale the equity raise to a gross total of £40m, resulting in a net take of £38.7m.
Dan Finley, the group’s chief executive, told shareholders: “The fundraise will deliver an improved capital structure for the Group, providing us with greater financial flexibility to execute our turnaround strategy and deliver value for all shareholders.”
Iain McDonald, a non-executive director at Debenhams, announced his resignation but praised Finley’s work, claiming Debenhams’ market valuation “undervalues its future prospects”.
Debenhams overshoots equity target despite market jitters
Shares in Debenhams, which trades as Boohoo, tumbled immediately after it announced the equity round and dropped further to 18p per share at the Wednesday close, marking a 20 per cent fall since Monday’s open.
But news of the high interest in stakes seemed to calm investors on Thursday morning, leaving the stock up almost ten per cent by the end of trading.
Tom Leman, head of retail and consumer at Pisent Masons, told City PM: “Debenhams’ decision to raise fresh equity is an essential part of shoring up liquidity and deleveraging the balance sheet. Yet the 20% fall in the share price since Monday signals investor unease.
“At its core, this is a classic example of a bricks‑and‑mortar legacy business struggling to complete its transformation into a full‑scale digital operator.”
Lotte Williams, head of retail and e-commerce at HaysMac, told City PM that this boost in liquidity will offer Debenhams more resilience against supply-chain disruptions and fluctuating consumer demand.
“However, Debenhams will now have to implement its strategy effectively, investor expectations will be high in a difficult consumer market. There will be pressure to meet its targets and deliver the turnaround promised,” she said.
Ashley is at bay for now
Debenhams will have hoped the new equity would allow it to turn a corner from the high-profile tussle with Sports Direct owner Mike Ashley, who had been fighting to gain a seat on its board.
On Thursday, this dispute appeared to be resolved for the time being after Ashley’s Frasers Group participated in the equity raise, despite past criticism of the group’s plans to sell assets.
Frasers Group contributed 27 per cent of the new equity, purchasing over 59 million shares for £11.21m.
Though this could be seen as backing Debenham’s strategy, the Business Desk reported that this move was taken to maintain Frasers’ pressure on the Group’s directors.
Dan Coatsworth, head of markets at AJ Bell, said Frasers’ involvement signals that Ashley has not given up on the hope of ousting co-founder Mahmud Kamani from the Debenhams Group board.
He said: “Frasers has been relatively quiet regarding its investment in Debenhams since publishing an open letter in August 2025, raising concerns about Kamani’s alleged conduct.
“By participating in the latest fundraise, Frasers maintains its position as a major shareholder and may potentially use this position to continue banging the drum for change in the business.”
Frasers Group was contacted for comment.