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Firms race for cashcalls after market rally

Source: Reuters - Thu 24th Sep 2009

A flurry of cashcalls on the London market shows British firms are moving swiftly to ride a recent stock market rally and boost capital before possible jumbo deals by other companies swallow up available funds.

"Whilst the markets may be buoyant, boardroom directors will not forget in a hurry what it was like only six months ago. We will see a continued shift towards prudence in the capital structure" said Ben Canning, head of BNP Paribas' UK equity capital markets.

The prospect of Royal Bank of Scotland soon seeking to raise up to 4 billion pounds and rival Lloyds possibly looking for over 10 billion has leant some urgency to the cashcalls, fund managers said.

Housebuilder Barratt Developments and publisher Yell topped a list of companies raising millions on Wednesday, calling for 720 million pounds and 500 million pounds respectively.

Shopping mall owner Liberty, another housebuilder Redrow and miner Hambledon also asked investors for cash.

The moves come against the backdrop of a 5 percent rise in Britain's benchmark FTSE 100 share index this month, and a 21 percent rally since the end of June.

Bankers expect companies to tap the equity market as investors and rating agencies are increasingly looking to common share equity as a key component of capital structure.

UK-listed companies have raised $106 billion so far this year, led by cashcalls by banks earlier in the year, up 57 percent from the same period a year ago and accounting for 17 percent of global volume, according to Thomson Reuters data.

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