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Hedge funds cash in as Hammerson shares hit by £800m fundraising plan

Birmingham Bull Ring 
Birmingham Bull Ring

Hedge funds betting against Hammerson notched up a multi-million pound win after the shopping centre owner confirmed plans to raise £600m of emergency cash - sending shares tumbling.

Almost £60m was wiped off the company's  market value in early trading as Hammerson bosses admitted it could seek to tap up shareholders following a collapse in rental payments.

The slump netted paper profits of about £8m for hedge funds including Marshall Wace and CapeView Capital. The funds have been short-selling Hammerson's stock, meaning they make money if it drops in value.

As well as a possible rights issue, Hammerson said it is in advanced talks to sell its 50pc stake in European shopping centre owner VIA Outlets to Dutch pension fund APG in a bid to shore up its finances.

The embattled firm did not disclose further financial details of the sale or rights issue, but Sky News reported that Hammerson hopes to raise more than £800m.

Analysts at Peel Hunt said: "With no clarity on future rental levels, and question marks over the company's future strategy, it remains to be seen whether investors will back an equity raise greater than the current market capitalisation."

The company's main UK rival Intu, the owner of Manchester's Trafford Centre, collapsed into administration at the end of June.

Already struggling with heavy debt loads before the pandemic hit, shopping centre owners have been dealt a hammer blow as rent payments dried up during lockdown and shoppers moved online.

However, Hammerson said footfall and sales at its centres have continued to improve since restrictions were eased. It added that more than 30pc of third quarter UK rents have now been collected.

Last month the firm dwithdrew £300m from an overdraft and won approval to tap the Bank of England’s emergency coronavirus loan scheme.

The business - which also owns London's Brent Cross - scrapped its dividend in March, while chief executive David Atkins and chairman David Tyler have both set out plans to leave the company.

More than 14pc of Hammerson shares are on loan to short-sellers also including Caxton Europe and Woodson Capital, making it the most shorted stock on the London market.

After falling 12.7pc to 56p shortly after 9am, the shares recovered some ground to close down 4.95pc, valuing the owner of the Bullring in Birmingham at £467m.