New G4S boss starts turnaround with $541m share sale

G4S, the world's largest security services firm, raised £348 million (€405m) through a share sale, with more to come from asset disposals, as its new boss seeks to cut debt and focus on emerging markets.

Chief executive Ashley Almanza, a former executive at oil and gas firm BG Group, was promoted from finance chief in June after a string of blunders by his predecessor Nick Buckles, including a failed takeover bid in 2011, a botched contract to staff the 2012 Olympics and a profit warning in May.

Mr Almanza said he would give a detailed plan in November but initial measures to raise about £600 million, including via the share-placing, should help it avoid a costly credit-rating downgrade and improve profit margins.

G4S later said it had sold 140.9 million shares to new and existing investors at 247 pence each.

The company, which also plans to sell some lower-margin businesses to help fund expansion in faster-growing markets, said the placing had the support of its largest shareholder.

Analyst Mike Allen at brokerage Panmure Gordon welcomed Mr Almanza's debut announcement as chief executive.

“We applaud the quick work undertaken by management to restructure the group and shore up the balance sheet.”

G4S shares closed 2.9 per cent up at 252p.

Shares often fall on announcements of equity fundraisings as these cut earnings per share for investors.

G4S, which runs services from managing prisons to guarding tennis players at Wimbledon, aims to benefit from a trend among governments and businesses to outsource security work. However, it has come under pressure as governments in developed markets cut services. The British government is also refusing to award G4S new work pending a review of contracts after an audit found it and rival Serco charged for tagging criminals who were either dead, in prison or never tagged in the first place.

G4S said its first-half operating profit margin slipped to 5.5 per cent from 5.9 per cent in the same period last year, reflecting a lost prison contract in the Netherlands and squeezed pricing in Britain and elsewhere in Europe. – (Reuters)