Schroders is currently assessing the launch of an investment trust that will provide fresh equity to both public and private markets.
The trust, which the firm hopes to launch in Q4 2020 subject to client support, would look to invest in high-quality sustainable businesses that have strong growth opportunities ahead, "if they can just survive the present", according to group chief executive Peter Harrison.
A spokesperson for Schroders said: "It is expected that a large number of public and private companies will need new equity in the coming months and years.
"Many do not have access to sufficient funding, preventing them from growing domestically or expanding internationally. For the UK economy to recover there needs to be greater availability of equity.
"As stewards of capital, we feel it is our responsibility to assist in helping high-quality businesses through this extremely challenging situation."
Harrison noted that companies in the small and mid-cap space - with market caps of £50m and £2bn in particular - will require the most support because they are "too large to be the focus of the government's initiatives, but are not "mega caps" able to wield their clout with banks or credit markets".
"These small and mid-sized companies comprise 69 of the 300 public equity placings seen so far. Through these, they have raised around £3.8bn. Our fear is that this could prove a drop in the ocean compared to what is needed," he explained.
"So far, it has been surprisingly easy for companies to raise money with demand buoyed by a resurgence in stockmarkets. But if markets become less resilient or if a second wave of Covid-19 comes companies will struggle to raise additional funds in flat or falling markets."
If the trust launch commences later in the year, its shares will be available to invest in on the London Stock Exchange.
More details to follow…