Investor appetite for the rights issue by Kier (KIE) was conspicuous by its absence, with just 38 per cent taken up by shareholders. But as the issue was fully underwritten by banks and brokers, Kier secured the £250m it was seeking to raise.
The big losers were Citigroup, HSBC, Santander, Numis and Peel Hunt who were left holding the balance not taken up. Worse still, with over 10 per cent of Kier shares borrowed by short sellers, the price collapsed to 375p, well below the 409p discounted price at the rights issue and sharply lower than the 740p before the announcement.
It is not entirely a straight forward exercise to differentiate between Kier’s performance, where cashflow remains a concern, and the altogether bearish outlook for the construction sector. Carillion has highlighted how easy it is to get it wrong, and given the political and economic uncertainties, banks are looking less favourably on the sector when it comes to lending money.