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Fund raising via rights issue picks up, climbs 48pc to Rs. 6750 cr

Fund raising through rights issue jumped 48 per cent to Rs. 6,750 crore in 2014-15, a sign of increased interest among domestic companies to mop up capital through this route.

This is higher than Rs. 4,573 crore raised in 2013-14.

The number of issues, too, went up to 17 in the past fiscal, from 13 in 2013-14.

Market experts said return of investor confidence in the equity markets is at work, which encouraged some of the large firms to go for the rights issue mode.

Most of the funds raised were meant for expansion plans and supporting working capital requirements of the companies.

In a rights issue, shares are issued to existing investors at a pre-determined price, normally at a discount, in proportion to their holdings.

According to the latest data, the gap between capital raised through the rights issue and funds via other routes like initial public offering (IPO) still remains wide.

IPOs saw a mobilisation of a total of Rs. 2,769 crore during 2014-15. That apart, around Rs. 400 crore came in from Institutional Placement Programme (IPP). However, in the past fiscal, not a single firm opted for the FPO (Follow-on Public Offer) route to mop up funds.

The largest rights issue in the said period was from Future Retail (Rs. 1,589 crore), followed by GMR Infrastructure (Rs. 1,402 crore) and Indian Hotels (Rs. 1,000 crore).

The fund-raising was in step with the soaring markets where the benchmark Sensex gained around 25 per cent in 2014-15.

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