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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
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
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...