Returns of rights issue subscribers a mixed bag for investors since 2019

Returns from rights issues conducted since 2019 have been a mixed bag for investors. Over the past 16 months, domestic markets have seen 15 entities raise fresh equity capital to the tune of Rs 56,000 crore via rights offerings. Shares of only six of these are trading above their issue price.

Rights issue is a mechanism available for listed firms to raise money by offering existing shareholders new equity shares. The new shares are typically offered at a discount to the prevailing market price, to incentivise investors to subscribe.