From backseat to driver's seat, rights issues take the wheel in 2024

From coasting to leading, they seize control of fundraising road in 2024

Fundraising through rights issues saw a resurgence in 2024, marked by a rise in the size of transactions. A total of 20 companies raised Rs 21,404.09 crore through rights issues, compared to 12 companies that raised Rs 7,266.33 crore in 2023.

 

A rights issue allows listed companies to raise capital by offering new equity shares to existing shareholders, typically at a discount to the current market price to encourage subscriptions. This method is often preferred when the promoter group wants to retain its ownership stake.

 

Notable rights issues include Grasim Industries, which raised Rs 4,000 crore; Indiabulls Housing Finance, which raised Rs 3,693 crore; Tata Consumer Products (Rs 2,998 crore); and Sobha (Rs 1,999 crore), among others.

 

Rights issues were a common fundraising tool in the 1990s, with an average of 240 issues launched annually from 1990 to 1996, according to PRIME Database.

 

In recent years, however, qualified institutional placements (QIPs) have become more popular due to their simpler execution. In 2024, 95 companies raised Rs 1.36 trillion (Rs 1,36,060 lakh crore) through QIPs.