Cash call to strengthen balance sheet is new chief executive’s first move

Investors have snapped up 95.67% of RSA’s new shares, causing RSA chief executive Stephen Hester to declare the rights issue a success.

It means RSA has now raised the bulk of the £748m right issue, cash desperately needed to shore up its capital strength after discovering accounting and reserving problems in its Irish operations. The money will be held as cash or low-risk investments.

RSA chief executive Stephen Hester said: “I am very pleased with the successful outcome of our rights issue and would like to thank shareholders for their support.

“We have the tools needed to ensure that RSA fulfils its potential and delivers value for our customers and shareholders. Our focus is on implementing the strategic and operational changes outlined in February; the targets we have set and managing RSA with clarity, determination and effectiveness.”

The insurer opened the rights issue – which offered 1,380,976,863 shares at a discounted price of 56p to existing shareholders – on 25 March and closed it yesterday morning. Shareholders were offered three new shares for every eight held.

It received acceptances for 95.67% of the total shares it will issue. The rights issue was underwritten by JP Morgan and Merrill Lynch. The banks will now try to find subscribers for the remaining 59.7m shares, and will acquire not taken up.

Shore Capital director Eamonn Flanagan said: “I think the market will take it as a resounding endorsement of Stephen Hester’s plans to date.”