Several institutional investors in Tesco have signaled that they would back a capital-raising of £1bn to £2bn, according to reports.
A group of large investors are understood to have met informally yesterday and concluded that they would be supportive if the retailer decided to launch a rights issue to strengthen its balance sheet in the wake of the £250m profits overstatement, according to The Times.
One representative told the paper: “I wouldn’t exactly say we were delighted, but there was a general acceptance that a fundraising is going to be necessary. We’d rather they did it now rather than wait and do it later on in the tenure of the new chief executive [Dave Lewis].”
Yesterday Tesco suspended a fifth senior executive as it investigates the profits overstatement. Kevin Grace, Tesco’s commercial director, was asked to step aside for the investigation.
The fund managers also discussed governance at Tesco and decided they needed to wait until the investigation was complete before coming to a decision on how the board might be changed.
Some believe chairman Sir Richard Broadbent should step aside after the investigation, and some pointed to Richard Cousins, chief executive of Compass Group, who was appointed a non-executive on Monday, as a prospective successor.