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Seven companies raise Rs 11,000 crore via rights issue thus far in 2015

Fund raising through rights issue has crossed Rs 11,000 crore mark this year, indicating growing traction among domestic firms to mop up capital via this route.

This is much higher than about Rs 5,224 crore garnered via issuing ‘rights’ shares in the entire 2014.

Market experts say that fund raising through this route is likely to go up further as many firms have lined up plans for rights issue, where shares are issued to existing investors at a pre-determined price, normally at a discount, in proportion to their holdings.

As per an analysis of capital raised through this route, a total of seven firms have raked in Rs 11,535 crore so far this year (January-July). Most of the funds were for expansion and to support working capital requirements.

The largest rights issue was from Tata Motors that raked in Rs 7,498 crore followed by Future Retail (Rs 1,589 crore), GMR Infrastructure (Rs 1,402 crore), State Bank of Travancore (Rs 474 crore), Can Fin Homes (Rs 276 crore), Zee Media Corp (Rs 195 crore) and Vascon Engineers (Rs 100 crore).

According to market analysts, a positive outlook for equities and availability of capital have opened this window for the companies to mop up fresh funds from issuing ‘rights’ shares.

There was a huge gap between the capital raised through rights issue and funds garnered via IPO routes. A total of Rs 4,000 crore has been mopped up via initial public offerings (IPOs) so far this year.