Recruiter Hays set to raise $248 mln to cope with coronavirus-hit hiring

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One of the world’s biggest recruiters, Hays, was on course to raise 200 million pounds ($248 million) via a new share issue on Thursday, seeking to prop up its finances in the face of an expected collapse in fees due to the coronavirus.

Unveiling measures to stabilize its business, the company said the health crisis had driven a “very material deceleration in client and candidate activity” and that under its modeled scenario net fees could fall about 35% by the end of 2020.

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“The past few weeks have been unlike anything the world has seen in modern times and has severely impacted recruitment markets globally,” Chief Executive Officer Alistair Cox said in a statement.

Shares of the FTSE 250 company were down 8.8% at 99.7 pence as of 1247 GMT, with bookrunners expecting the deal to be priced at 95 pence, a roughly 13% discount to Wednesday’s close.

Recruiters are among businesses most exposed to the downturn as companies cut costs and halt new hiring while lockdowns drag out employment processes.

Hays, which is largely focused on hiring for white collar roles, said it expects the impact of the virus to be “substantial” and profit for the year ending June 30 to be materially below market expectations.

“It is our view this will be a more difficult downturn than the GFC (global financial crisis) … we think it makes sense to raise equity now,” said Finance Director Paul Venables.

“This makes sure that whatever the phase of the downturn is, however long it continues, we will be in a cash positive position throughout that period of time.”

Like its peer Robert Walters, Hays has also canceled its dividend and implemented cost reductions ranging from stopping hiring to cutting management pay.

It expects it could save up to 20 million pounds per month by December.

“While there will be some surprise at raising money, as the group should be able to navigate through without it, we see it as an astute move,” Barclays analysts Paul Checketts said.

Hays, which has been expanding into countries in Europe, Asia and the Americas, has 35 million pounds in net cash as of March 27, it said, with 165 million pounds in undrawn credit facilities.

($1 = 0.8053 pounds) (Reporting by Yadarisa Shabong in Bengaluru; Editing by Bernard Orr and Andrew Cawthorne)