Rights Issues Take Wheel After Sebi's Tune-Up

In May, four firms raised Rs 4,188 crore via rights issues -- the highest monthly total since January 2024. Key offers included Mahindra & Mahindra Financial Services (Rs 2,996 crore),  Lloyds Engineering Works (Rs 987 crore), Max India (Rs 124 crore), and Avantel (Rs 81 crore).In April, Fusion Finance raised Rs 800 crore. This month, at least six more rights issues -- including UGRO Capital's Rs 400 crore offer -- have opened for subscription.

The pickup follows Sebi's revised framework, which has made rights issues faster and more attractive for companies seeking capital.

Rights issues allow listed firms to raise funds by offering existing shareholders new equity shares, often at a discount, enabling them to retain their ownership stakes.

Key changes include cutting the process timeline to 23 working days from an average of 317, a seven-day subscription window for investors, faster allotment, and tradeable new shares.

Simplified disclosures and earlier reforms, such as the renunciation and trading of rights entitlements, have further added to the appeal.     

-- Sundar Sethuraman, Business Standard