Barratt Developments confirms £720 million fundraising
As we covered last night in one of our post, Barratt Developments has today confirmed a £720 million fundraising which will allow the company to strengthen the balance sheet and also acquire land for future development. This seems to be something of a new trend in the property sector although there are also signs that many more companies in other sectors are looking to take advantage of the recent stock market rise to "tap" investors for cash. Is this the right route?
There is no doubt that many people had expected more and more companies to come forward with fundraisings bearing in mind the fact that the recession has shattered many companies and their balance sheets. However, while the initial flurry of fundraising may be positively received by investors, there is a feeling that investors may well become more subjective the more fundraisings that are announced.
While strengthening a balance sheet is of vital role for any company director there is a need to also give potential new investors reason to believe the company has growth potential for the future. If directors are unable to convince investors of the potential for the future we could see a number of fundraisings fail, placing more pressure on company balance sheets and the existence of some companies.
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