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Rights issues gather pace amid infrequent IPOs - Newspaper

The abundance of rights issues by listed corporates in the current calendar year has helped, to some extent, satiate the investors’ appetite for good stocks. While private limited companies still lack interest in going public as shown by a handful of initial public offerings (IPOs) in 2020 rights issues by companies have been generous. Rights issues, when offered by reputable companies with a record of consistent earnings growth, healthy dividends and an attractive price, have been greeted warmly by stockholders. That is regardless of the fact that the rights issues tend to dilute market prices of such stocks. A company in need of cash to finance expansion, make debt repayments or pay for working capital can raise funds through a rights issue. Existing shareholders have the first right of acceptance or renunciation of additional shares. Unlike bonus issues, rights shares are offered at a price. In the current calendar year, as many as 20 listed companies have approached sh

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