Six companies file papers for rights issues

As many as six firms, including Alok Industries and Golden Goenka Fincorp, have sought market regulator Sebi's approval in the past two months to raise funds through rights issues.

Of these companies, four, including Dynacons Systems & Solutions and Kalyanpur Cements, filed their respective draft offer documents with the Securities Exchange Board of India (Sebi) last month for raising funds through rights issue.

Alok Industries and Golden Goenka Fincorp also filed their papers with Sebi last month, while Food and Inns and Media Matrix World Wide submitted their documents to the regulator in August.

In rights issue, shares are issued to existing investors as per their holding at a pre-determined price and ratio.

In August, Sebi had given its go-ahead to four rights issues, totaling about Rs 5,500 crore, proposed by TV 18 Broadcast, Network 18 Media & Investment, Bajaj Finserv and Bhushan Steel.

The rights issues of Network 18 and TV 18 would together raise funds worth about Rs 4,000 crore, while Bajaj Finserv and Bhushan Steel have offered to raise up to Rs 1,000 crore and Rs 474 crore, respectively.

Among the upcoming rights issues, Alok Industries is expecting to raise funds worth about Rs 551 crore, Golden Goenka Fincorp has offered to mop-up Rs 131 crore and Matrix World Wide is planning to garner Rs 111.60 crore.

Food and Inns, Kalyanpur Cements and Dynacons Systems & Solutions have offered to raise up to Rs 15.50 crore, Rs 10.62 crore and Rs 3.94 crore respectively.

According to market experts, market stability could be the one reason why companies are opting for an equity issuance to existing shareholders.

Out of the six pending applications, five "under process' at Sebi's end, while the regulator has sought clarification or additional information from the merchant bankers of one company, Media Matrix World Wide, as per the latest information, updated till October 12, 2012 with the regulator.