A rights issue is a mechanism for listed firms to raise additional capital by inviting existing shareholders to buy new shares proportionate to their existing holding at a discount to the prevailing market price.
With the coronavirus outbreak hitting the economy hard, many companies are taking to rights issues to raise funds. Here are a few companies:
Shares of Mahindra & Mahindra Financial Services rose over 10 percent after the company posted a robust set of numbers for the quarter ended June and its board approved rights issue.
The company plans to raise Rs 3,500 crore and will issue 61,77,64,960, fully paid-up equity shares of the face value of Rs 2 each at Rs 50 per share for the same.
Multiplex major PVR has also recently floated a Rs 300 crore rights which opened for subscription on July 17 and will close on July 31. The price of the issue was fixed at Rs 784 per equity share.
The scrip has risen over 1 percent since PVR's board approved the issue. On a year-to-date basis, the stock of PVR is down over 44 percent.
Shriram Transport Finance launched its Rs 1,500 crore rights issue on 16 July at a price of Rs 570 per share. The stock of the company has since returned over 5 percent. The rights issue will close on 30 July.
Aditya Birla Fashion and Retail Ltd also came out with a Rs 995 crore rights issue recently. The issue opened for subscription on July 8 and will close on July 22. Since the opening of its rights issue, Aditya Birla Fashion has fallen over 10 percentA rights issue is a mechanism for listed firms to raise additional capital by inviting existing shareholders to buy new shares proportionate to their existing holding at a discount to the prevailing market price.