IWG raises £320m for post-Covid expansion

IWG has raised £320m by selling shares to investors to give the company funds for expansion following the Covid-19 crisis.

The flexible workspace company said it sold 133,891,213 new ordinary shares through a placing and retail offer. It sold the shares for 8,1% below the closing price of 260.2p on 27 May.

The new shares represent about 15.4% of the company's share capital before the sale. Mark Dixon, IWG's chief executive, spent £91.3m to buy 28.53% of the shares – in line with his holding in the company.

The company's shares rose 15.3% to 300p at 10:51 BST.

IWG announced the placing and retail offer after the market closed on Wednesday. It said it would use the money to expand its business to meet increased demand prompted by the Covid-19 crisis, including flexibility, cost savings and the need for social distancing. Opportunities include buying weak competitors, it said.

In a trading update the company, formerly called Regus, said occupancy had held up well in April but revenue was affected by lower new sales and less ancillary business. It has made cash savings from operations or about £150m through measures such as withdrawing the final dividend, cutting board pay, furloughing employees and reducing spending and new openings.

"The recovery of the group's revenues performance in the third and fourth quarters will be largely determined by the extent to which lockdown measures are progressively lifted across markets in which the group operates," IWG said.