UK companies embrace cashboxes in Covid-19 fallout

Author: Lizzie Meager | Published: 5 May 2020


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Investor groups and retail participation advocates have raised concerns over the large number of UK companies making use of a cashbox structure in recent share placements undertaken as a direct result of the ongoing Covid-19 pandemic.

Approximately 30 companies have raised cash in this way so far, with the expectation that there will be more to come. The transactions are highly efficient, taking around three days – often even less – and documentation-light.

Cashbox structures can be controversial, however, because they allow companies to skip an initial offering to existing shareholders – who in the UK have significant pre-emption rights. This could potentially exclude long-term stakeholders, and bypasses retail investors altogether.

One banker who has worked on a number of these transactions said that investors should be more concerned by the risk that the company does not survive the pandemic than...