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Carphone co-founder Ross buys into Big Yellow placing

David Ross, the flamboyant co-founder of the Carphone Warehouse, is to spend about £250,000 on buying new shares in Big Yellow Group, the self storage company that will unveil plans for a £25m fund-raising.

Shelley Ross and David Ross
Primary colour: David Ross is to invest £250,000 buying new shares in Big Yellow. Mr Ross is pictured with his wife Shelley at the Conservative Party Summer bash at the Royal Hospital Gardens, Chelsea, London in July 2006 Credit: Photo: Rex Features

Big Yellow is expected to announce on Monday that it is undertaking a placing to raise £25m.

The business is planning to use the cash to buy property sites in and around London, which have declined dramatically in value over the last 18 months.

Last year, Mr Ross resigned from the boards of Big Yellow Group, Carphone Warehouse and National Express after it emerged he had pledged some of his shareholdings in those companies as collateral against loans.

He also resigned as an adviser to the Olympic 2012 committee, to which he was appointed to oversee financial issues by the Mayor of London, Boris Johnson.

Mr Ross was subsequently cleared of any wrongdoing.

He holds a 19.4pc stake in Carphone Warehouse, the telecoms retailer founded with Charles Dunstone, his school friend, in 1989. The entrepreneur started working for Mr Dunstone's venture as the financial director of Carphone Warehouse in 1991.

As well as Mr Ross, Nicholas Vetch, Big Yellow Group's chairman, is also planning to spend some of his own money buying new shares in the company. Investment bank JP Morgan Cazenove is underwriting the £25m placing for Big Yellow Group.

The fund-raising comes as the City witnesses a second wave of equity fundraisings from companies that either need funds to help pay down debts or finance strategic initiatives, including acquisitions.

Earlier this year some of Britain's largest companies, such as mining company Xstrata and banking group HSBC, raised over £20bn from investors.

As a result several smaller businesses, among them Brit Insurance, abandoned their planned fund-raisings as investors grew tired of backing cash calls. Investors have also been reported to have rebuffed a placing from Pearson, publisher of the Financial Times.

However, two weeks ago the rush to raise fresh funds restarted following a stock market rally from the early March lows.

Private equity investor 3i, housebuilder Taylor Wimpey, platinum miner Lonmin and builders' merchant Travis Perkins all announced rights issues or placings to raise between £300m and £700m.

And speculation is mounting that several other companies will follow suit before investors take a break for the summer.

Those companies considering fund-raisings include department store group Debenhams, which is said to be keen to tap investors for £500m to help pay down debt.

Other businesses that may ask for fresh capital include car parts maker GKN and housebuilder Barratt Developments.

JP Morgan Cazenove brokers and analysts believe BBA Aviation is keen to raise £150m and will scrap its dividend to help the company and stay within its debt covenants. However, people close to the company said BBA Aviation has no current plans to carry out a fund-raising.

Analysts have also started to raise the prospect that some property companies may have to go back to shareholders for fresh capital after carrying out a series of fund-raisings earlier this year.

This is because rents and capital values are expected to decline. So, there is a risk some property companies could breach their loan-to-value covenants or fail to renegotiate loans that need to be refinanced this year.

On Friday, Harm Meijer, property analyst at JP Morgan, said: "We believe it is not a shame to ask (a second time) for equity as long as the business plan is there."

Big Yellow Group declined to ­comment.