Kuwaiti state fund in talks to take part in struggling Rolls-Royce | Economic news


Kuwait’s sovereign wealth fund is in talks to buy a stake in Rolls-Royce Holdings as one of Britain’s largest industrial groups scrambles to raise billions of pounds in new funding.

Sky News has learned that the Kuwait Investment Office (KIO), part of the Gulf State investment vehicle, is negotiating a deal in a potential £ 2.5 billion cash call.

Sources said on Friday that Rolls-Royce was in talks with the KIO – a London branch of the Kuwait Investment Authority – and Singapore’s Government Investment Corporation (GIC).

Rolls-Royce to cut 9,000 jobs

GIC’s interest was reported last week by the Financial Times.

In total, £ 500million of new shares has been awarded to sovereign investors, meaning the two SWFs could acquire stakes worth £ 250million each, the sources added.

Rolls-Royce, the maker of aircraft engines, has seen its track record hit by the coronavirus pandemic and has been forced to cut thousands of jobs as it braces for a prolonged drop in customer demand of aviation.

The company, led by chief executive Warren East, plans to launch a rights issue to raise up to £ 2.5 billion as of October 1, insiders said.

Warren East is the CEO of the company

A Rolls-Royce spokesperson said: “We continue to explore all financing options to improve resilience and balance sheet strength.

“Among other options, we are assessing the merits of raising equity capital up to £ 2.5bn, through various structures, including a rights issue and potentially other forms of equity issuance. .

“No final decision has been made as to whether or when to proceed with any of these options or as to the precise amount that can be raised. ”

The magnitude of the fall in Rolls-Royce’s share price – its valuation fell by more than 80% last year – means a £ 2.5bn fundraising appeal would imply the company increases almost all of its market capitalization by issuing new shares.


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