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Funds via rights issue at 4-year low

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New Delhi, 7 January
Marking the lowest level in four years, Indian companies raised Rs 4,101 crore through issuance of ‘rights’ shares to their existing shareholders in 2013 amid volatile markets, according to a report by Prime Database.
The report said that 2014 is also likely to see little action on the rights front.
In a rights issue, shares are issued by the companies to their existing investors as per their holding at a pre-determined price and ratio.
According to the report, a total of Rs 4,101 crore were garnered in 2013 as against Rs 7,295 crore raised in the preceding year, indicating a 44 per cent slump.
This was also the lowest level of funds raised through rights issue since 2009, when companies had raked in Rs 3,774 crore.
By way of numbers, 2013 witnessed 12 companies using the rights route as compared to 17 firms in the preceding year.
“Volatile market conditions through the year, delays in the rights issues process and an overall lack of confidence in companies to raise and deploy fresh capital were the main reasons for the poor utilisation of the rights route,” Prime Database MD Pranav Haldea.
The largest rights issue in the year 2013 was from Bajaj Finance (Rs 744 crore), followed by Godrej Properties (Rs 700 crore) and Reliance Mediaworks (Rs 600 crore).