Woodford leads charge to oust chiefs at struggling Kier

Leading shareholders in Kier Group (LSE: KIE.L - news) , one of Britain's largest construction firms,‎ are pushing for a shake-up of its executive team weeks after it raised £250m in a surprise rights issue.

Sky News has learnt that Woodford Investment Management, which holds a 16% stake in Kier, is among a group of investors questioning the future of Haydn Mursell, its chief executive, and finance director Bev Dew.

Neil Woodford, the prominent fund manager who runs the firm, is said to have expressed a desire to see one or both of Mr Mursell and Mr Dew replaced in the coming months.

Other big Kier shareholders‎ are said to be supportive of Mr Woodford's desire for management changes.

They are likely to intensify a campaign for the construction company's bosses to be replaced unless Philip Cox, its chairman since July 2017, moves to find successors in the short term, one City source said this weekend.

Kier successfully raised the funds it was targeting from the rights issue, but the episode was nevertheless an embarrassing one for its board.

The fundraising was fully underwritten by five banks which were forced to take on nearly two-thirds of the new shares following a slump in Kier's market valuation.

They have since been sold to institutional investors, and Kier's share price has begun to recover in the aftermath of the rights issue.

The underwriters' losses were partly offset by £14m paid by Kier in fees.

Mr Mursell said the capital-raising was required because of weakening sentiment towards the construction industry from mainstream lenders.

After it closed, he said: "Kier enters 2019 with a strong balance sheet which puts us in an excellent competitive position."

Nevertheless, the broader industry is in a state of flux, with margins under constant pressure and lenders warier in the wake of Carillion (Frankfurt: 924047 - news) 's collapse a year ago.

In the wider outsourcing sector‎, Interserve (Frankfurt: 860509 - news) 's future remains subject to the implementation of a debt-for-equity swap, while Laing O'Rourke has been working on securing new borrowing facilities.

If Mr Cox does opt to replace Mr Mursell and Mr Dew, he would need to find new executives from outside the company, according to investors.

Woodford has been adding to its Kier shareholding‎ in recent weeks, which other institutions said would add further credibility for a management shake-up.