Rights issue market gets back its rhythm (1) July 25, 2009
Posted by dhirendra1972 in Imporved Sentiments, Large-size Merchant Bankers, Lower Level, Major Rights Issues, Small-size Merchant Bankers.Tags: Allotment Details, Funds, Merchant Bankers, Raising Plans, Shareholders, Signs of Revival, Stock Market, Stock Market Turnoil
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Good morning friends. The rights issue market is showing early signs of revival with a few recent offers getting fully subscribed. Merchant bankers say this response may encourage many other companies to raise funds through the rights issue route. Many companies had deferred their fund raising plans, following the failure of some major rights issues, amid last year’s stock market turmoil.
Of the three offers that hit the market in May and June, two — Sundaram Brake Linings and Syncom Formulations — were subscribed 1.1 times each while another issue, High Energy Batteries, was subscribed to the extent of 99% its size, according to allotment details available with Delhi-based market tracking firm Prime Database. The shareholder response to these offers was unlike the two earlier ones — Chemplast Sanmar and Gangotri Iron & Steel — where the subscription level was much lower at 79% and 31.5%, respectively. While most of these offers were small in size, merchant bankers hope relatively large-sized offers may soon hit the market to take advantage of the improved sentiment.
About a dozen companies have announced plans to raise funds through rights issues. These include Fortis Healthcare and Wire & Wireless India, among a few notable examples. The two companies have decided to raise Rs 1,000 crore and Rs 450 crore, respectively. While their respective boards approved rights proposal much earlier in December and August last year, the details about pricing and the schedule of the offers are still awaited. – The Economic Times
