Pubs group Marston’s and engineering firm GKN have won strong support from investors for raising funds worth a total of £600 million.
Redditch-based GKN has revealed that 95 per cent of new shares it has issued under a £423 million cash call to ease its debt mountain were snapped up by existing shareholders.
Wolverhampton brewer Marston’s, which asked investors for a £176 million boost in June to enable it to acquire and develop new pubs, received 91 per cent support for its rights issue.
Stephen Jones, the head of the Birmingham office of investment firm Brewin Dolphin, said the response to the fundraisings showed confidence in the management teams of each company and the investment was a positive sign for the stock market in general.
He said: “This is pretty encouraging. These are companies that are raising money for the right reasons, not for bail-outs to get the banks off their backs.
“It shows that the current shareholders are supportive of the management and believe they are doing the right things to grow the businesses.
“It also perhaps reflects that stock market conditions are becoming more favourable and more people are prepared to put money in than six or eight months ago.”
Mr Jones added: “Marston’s is reducing bank borrowings and building a war chest to expand its portfolio as it sees opportunities to buy land cheaply with the current conditions. I think that is quite positive and bodes well for the future.”
Both fundraising moves gained support as the new shares were offered at a deep 39 per cent discount to the theoretical “ex-rights” price.
But the costly nature of raising funds in equity markets was underlined by the £30 million paid by the two companies in expenses and fees.
Marston’s will be left with net proceeds of £165.8 million after £10.5 million in costs – a figure that raised concern among analysts and prompted about 20 per cent of shareholders to vote against the fundraising proposal earlier this month. GKN’s £20 million expenses leave it with £403 million.
Marston’s, which has more than 2,200 managed and tenanted pubs, wants the funds because the current conditions offered a “rare opportunity” to secure sites on attractive terms.
Marston’s slowed its new build programme last year but said the rights issue would allow it to deliver 20 to 25 new pub openings a year.
GKN, meanwhile, has warned of “considerable uncertainty” across its markets.
It wants to strengthen its position and take advantage of growth opportunities as competitors struggle.
The firm has seen its debts mushroom to £928 million since the beginning of 2008 with the decline in sterling and the acquisition of a wing component business on the Airbus site in Filton.
It announced last year it would close two long-established factories, in Great Barr and Walsall, and cut hundreds of jobs in the region after being hit by the recession.