Volatile market movement through 2010-11 proved to be a damper for companies planning fund raising through rights issue. The fiscal year saw only 17 rights issue mobilising Rs 9,594 crore from the market against Rs 32,519 crore raised through 30 rights issues in 2007-08.
The amount raised during 2010-11 is, however, 15% higher than 2009-10 (see table).
Rights issue is expected to gain momentum in 2011-12, market tracking firm Prime Database said. Manufacturing and services sector took the QIP (qualified institutional placement) and preferential issue route to raise funds in 2010-11, it said."32 companies have already applied for or have obtained approval from the Securities and Exchange Board of India for raising R1,781 crore. In addition, there are at least another 40 companies who have in the last 6 months announced their plans to tap the rights market and may firm up plans in near future," said Prithvi Haldea, chairman and MD, Prime Database. Floatation plans would also depend on secondary market conditions, he said.
During the year, banks accounted for around 50% of the total amount mobilised through rights issue at R4,776 crore. Central Bank of India topped the list with a R2,498-crore issue. Other banks that came out with rights issue included State Bank of Bikaner and Jaipur, State Bank of Mysore, Karur Vysya and Karnataka Bank.
Some other major issues included Suzlon Energy (R1,308 crore), REI Agro (R1,245 crore) and EIH (R1,179 crore).