Invesco chiefs warn listed companies over cash calls
Invesco has told listed companies they must make a convincing case for raising “precious and expensive” equity during the coronavirus pandemic.
A letter sent by the co-heads of UK equities at Invesco, obtained by Sky News, sets out their expectations for corporate fundraising.
It came after the Financial Conduct Authority (FCA) announced temporary measures to help UK plc raise cash quickly.
Mark Barnett and Martin Walker said they would not support companies without a “strong rationale” for asking shareholders for new funds. They urged listed companies to make use of government financing schemes such as the Covid Corporate Finance Facility as an alternative.
The watchdog said it encouraged listed companies to issue new equity to recapitalise the company in the face of the pandemic.
WH Smith and Asos are among retailers who have tapped investors for cash after taking a significant hit from lockdown measures in recent weeks.
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Barnett and Walker said they had “worked closely over the past month with the companies in which we are invested”.
“In these times of unprecedented uncertainty and volatility, we have analysed financial statements focusing on cash flow, liquidity and debt maturities in order to take a view on whether the company will be required to raise capital to strengthen its balance sheet and ensure its future viability.”
The Invesco chiefs added they were willing to support the UK economy “through the provision of long-term capital and essential market liquidity.”
Barnett, who is a protege of disgraced stockpicker Neil Woodford, has faced a difficult period. Earlier this week he was sacked by Perpetual Income and Growth for underperformance, ending months of uncertainty.
It came just days after Barnett was forced to apologise to investors over his performance after his £5.1bn high income and £2.7bn income funds were downgraded by Morningstar.
Invesco was contacted for comment.