Firms raise `5,000 crore via rights issue till oct this year

Fund raising through rights issue has crossed the Rs 5,000 crore mark this year, indicating growing traction among domestic firms to mop-up capital via this route. This is much higher than about Rs 4,100 crore garnered via issuing ‘rights’ shares in the entire 2013. Market experts say that fund raising through this route is likely to go up further as many companies have lined up plans for rights issue. According to latest update available with the market regulator Sebi, companies have mopped up Rs 5,205 crore through 16 rights issue from January to October. In a rights issue, shares are issued to existing investors at a pre-determined price, normally at a discount, in proportion to their holdings. Most of the funds raised this year were for expansion and to support working capital requirements. ‘We will see many companies tapping rights issue mode to garner funds as they have already obtained Sebi’s approval and and several firms intending to mop up fresh capital have filed applications with the regulator and are awaiting its approval,’ said a market expert. There was a large gap between the capital raised through right issue and funds garnered via IPO routes. A total of Rs Rs 1,522 crore mopped up via initial public offerings (IPOs) during the January-October period.