Sebi paper recommends rights issue as a preferred fund-raising tool

Mumbai: The capital market regulator Securities and Exchange Board of India (SEBI) has on Tuesday brought out a consultation paper on expediting the process of rights issues recommending the same as a preferred tool of fund raising.

The SEBI paper, which seeks stakeholder comments on its proposals, also suggests flexibility of allotment to selective investors applying to the rights issue.

Citing its own data in the paper, SEBI notes that among the various modes of fund-raise, the rights issue was the least used option in FY24, mopping just Rs 15,110 crore. As against this, QIPs mopped up Rs 68,972 crore, and Rs 45,155 crore came in through preferential allotment of shares. Compared to preferential issue, the number of rights issues too were substantially fewer.

To ramp up the share of rights issue in the overall pie of fund raising, SEBI held consultations with stakeholders in July and recommended a bunch of proposals. Among these, other key proposals are — doing away with the requirement of filing draft letter of offer with the SEBI; rationalising the content of letter of offer by reducing current disclosures, to contain only information such as object of the issue, price, record date, entitlement ratio, etc.