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Open For Business: How ECM Deals Are Still Getting Done

11 June 2020
Whilst we're living through unprecedented times, with significant market volatility, John Campion explores how ECM deals are still getting closed successfully.

Whilst we're living through unprecedented times, with significant market volatility, it is still possible to close ECM deals successfully. The UK equity markets have been working well with over $13bn of equity raised from over 170 equity transacitons between 1 March and 31 May. Deals have been split fairly equally between the main market of the London Stock Exchange and AIM and have ranged from fundraisings in the single digit millions up to a raise of £2 billion by Compass Group. Funds have been raised for a variety of reasons, including front footed reasons to take advantage of opportunities which may be presented by the crisis, to defensive reasons to provide liquidity or assist with debt finance negotiations. 

Most of the deals which have been completed so far have been so-called "undocumented" deals, where there is no requirement for any circular or prospectus, and the fundraising is conducted by way of accelerated bookbuild (ABB) within a day or overnight. These deals rely on existing share allotment authorities that most listed companies put in place at each AGM. But in the next phase we may well see some larger "documented" deals, where a prospectus is required or there is a need for an a general meeting for the purpose of giving necessary shareholder authorities.  

In the past few weeks DWF has completed a number of transactions  for its listed clients despite the impact of the ongoing COVID-19 lockdown, including acting for:

  • Keywords Studios, a technical and creative services provider to the global video games industry, on a placing which raised £100m to provide funding for acquisitions;
  • Immotion Group, a virtual reality business, on a placing which raised £1.35m;
  • K3 Business Technology Group, a global supplier of integrated business IT systems, on securing £6m in funding from Barclays and certain of its shareholders; and
  • N4 Pharma on a £2m placing for purposes including a COVID-19 DNA plasmid project.

So what factors are helping these and other transactions to close successfully. Here are our views on the key trends driving ECM activity in recent weeks:


  • Steps have been taken by the Pre-emption Group to facilitate equity offerings, with approval for non-pre-emptive capital raisings of up to  20 per cent of issued share capital. The Pre-emption Group guidance has said that such fundraisings should involve extensive wall-crossing in advance, soft pre-emption (which is where an attempt is made to broadly mirror the current shareholder register in the fundraising), and has stressed that management should have a role in share allocation.
  • The FCA has recognised the need for equity capital markets to be one of the solutions to the current crisis and has relaxed, on a temporary basis, the rules around working capital statements on a temporary basis, recognising the difficulties involved in producing a clean working capital statement in the COVID-19 circumstances. The changes allow for clean working capital statements to be included with specific disclosure of some of the assumptions underpinning that clean statement.
  • There has been renewed use of cash box structures to enable fundraisings to be undertaken quickly and efficiently without the need for a general meeting.


  • Certain sectors such as technology and pharma, have continued to be resilient to the downturn,  although a number of companies in more adversely affected sectors, such as travel and hospitality, have also been successful in raising equity in the lockdown.
  • Investors have funds available and are keen in particular to support companies in which they already have shareholdings. Investors are, however, being discerning and so it is important for companies to be able to explain the rationale for the fundraising, the reasons why it is being carried out now and that the amounts raised are sensible given the ongoing funding requirements of the company. 
  • There has been some reduced volatility, in part driven by macro steps to support economic activitiy, with markets rebounding fairly strongly over the last few weeks.
  • There has been a desire among certain companies to include retail shareholders in the fundraising where possible, either by way of inclusion of an open offer, or by using alternative means. The fundraising by Compass Group made use of Primary Bid's platform to include a retail element, one of the first main market placings to do that. 

These trends have been accompanied by market participants showing agility in adapting to the changed circumstances, with use of video presentations and meetings, and widespread adoption and acceptance of  electronic signature solutions. We would expect the use of such technological solutions to continue even once we are through the current crisis. 

For further information please contact one of our experts.

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