The City has experienced a lackluster year thus far, with few exciting mergers, acquisitions, or fundraisings. However, one individual defying this trend is adventurous businessman Nat Rothschild, who recently revealed his plans to tap the market for cash in order to fund a takeover at Volex.
While recent years have seen stock markets being used to line the pockets of CEOs and facilitate share buybacks, raising funds for expansion is the true purpose of these markets. Under Rothschild’s leadership, power cord maker Volex has thrived, becoming a supplier for Tesla, the leading producer of all-electric cars, as well as Volkswagen.
Volex aims to acquire Murat Ticaret, a Turkish manufacturer of complex wire harnesses, for £137 million. To fund this deal, Volex plans to raise £55 million through a share sale, with the remainder being paid from existing cash on the company’s balance sheet.
Fundraising: Nat Rothschild (pictured) has revealed he is tapping the market for cash in order fund a takeover at Volex
The share sale will involve 21,818,181 new ordinary shares being sold through a placing and retail offer at 275p per share.
Executive chairman Rothschild believes that this transaction will serve as a transformative move for Volex, diversifying the company’s end market and customer exposure. The market has responded positively to Rothschild’s bold approach, with one trader stating that they are glad to see a CEO taking risks and utilizing the market for its intended purpose.
In addition to the share sale, Volex also announced a 17.6% increase in revenues to £565 million during the last half year, along with an 8.3% rise in the final dividend.
Although the FTSE 100 and FTSE 250 experienced declines during this period, with the Bank of England’s decision to raise interest rates impacting market sentiment, investors sought out safe havens such as drinks giant Diageo and gold miner Antofagasta.
On the other hand, energy giants BP and Shell faced challenges as the Church of England announced its decision to sell its investments in these companies due to their misalignment with the goals of the Paris Climate Agreement.
Furthermore, premier hotel chain Whitbread saw its shares fall despite a surge in hotel room bookings, while GlaxoSmithKline achieved successful vaccine trials for RSV, a respiratory disease.
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