Recruiter Hays sees share price slump after capital hike to cope with Covid-19
The UK-based recruitment company’s shares fell on Thursday after raising £200 million in equity to strengthen its balance sheet amid the coronavirus pandemic.
Hays shares closed 13% lower on Thursday, with the stock plummeting after the recruiter announced it had raised £200 million in equity to cope with the economic impact of Covid-19.
The recruiter raised the additional funds via a new share issue, with the company eager to shore up its balance sheet in expectation of a major reduction in fees due to the global pandemic.
‘The past few weeks have been unlike anything the world has seen in modern times and has severely impacted recruitment markets globally,’ Hays CEO Alistair Cox said in a statement.
‘Today’s equity fundraise is designed to further reinforce our business so that we are strongly placed to build on our market leading positions globally by supporting our clients and capturing additional market share,’ he added.
Hays shares hit lowest level since July 2016
Hays recent stock market decline saw the mid-cap company underperform the broader market, with the FTSE 250 closing 1% lower on Thursday.
Shares in the recruiter have fallen more than 45% since the start of the year, with the stock hitting its lowest level since July 2016.
However, the company still has a long way to go before reaching its record low of 55p a share back in October 2008.
Hays’ US growth opportunities dwindle amid Covid-19
In the recruiter’s half-year results, Cox said growth had slowed over the first six months of trading due to ’macro uncertainties and reduced business confidence’.
‘Our focus is on cost management; however, we see good growth opportunities in our largest specialism of IT, and in the USA,’ he added.
But with the US in meltdown as it tries to cope with the economic impact of the Covid-19 pandemic, growth opportunities that once were are likely no more.
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