Why Are Companies Asking Investors for Money?

Companies are increasingly turning to shareholders for cash, but should investors take them up on their offer to buy more shares?

James Gard 26 May, 2020 | 10:31AM

UK coins

In the Covid-19 crisis, UK companies are increasingly turning to investors to raise money. But should investors take these firms up on their offer and what does all the jargon mean? We answer some of your key questions. 

Why are Companies Doing This? 

There are a number reason that firms turn to investors to raise cash. Hotel chain Whitbread (WTB), which has been hit hard by the lockdown's effect on restaurants, hotels and bars, is trying to raise just over £1 billion to shore up its finances during the coronavirus crisis. At other times, businesses use the money to invest to expand or to fund acquisitions, such as Boohoo (BOO) recently, which raised £200 million in 24 hours from investors to buy more brands.

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About Author

James Gard  is content editor for Morningstar.co.uk

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