UK companies embrace cashboxes in Covid-19 fallout

Author: Lizzie Meager | Published: 5 May 2020

For more articles like this, visit IFLR’s coronavirus resource hub.

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...