The rights issue of about Rs 21,000 crore of telecom company Bharti Airtel will open on October 5. The company said in the information given to the stock market that the record date for the eligibility of the rights issue has been fixed as September 28. The board of directors of Bharti Airtel had on August 29 approved raising Rs 21,000 crore through a rights issue. This amount will be raised at a price of Rs 535 per share including a premium of Rs 230.
The company said in the information that its special committee of directors has approved the date of opening of the rights issue on October 5, while it will be closed on October 21, 2021. The committee has approved 28 September as the record date for determining the eligibility of shareholders.
What is rights issue?
Under this, new shares are issued to the existing shareholders in a fixed proportion. The company often resorts to rights issues to raise money. According to the number of shares held by the shareholder, the rights shares are sold to him. If the rights issue is of 2:5, then 2 rights shares will be sold to the investor for 5 shares.
To make the rights issue attractive, their price is kept below the current market price. Issuance of rights issues increases the capital of the company. In simple words, if you have shares of Bharti Airtel, then you can get cheap in the rights issue of the company. Shares can be bought at the price.
Is it necessary for the investor to buy these shares?
If you are already a shareholder then it is not necessary to buy shares in the rights issue. You can use your rights. In such a situation, if investors feel that further growth is expected in the company and if shares are available at a cheap price, then money can be invested.
Why does the company bring rights issue?
The company brings a rights issue to raise money. Many times the company brings rights issues to raise money for expansion of business or acquisition of another company. Some companies also resort to the rights issues to reduce the debt burden.
What will be the effect on the stock
The rights issue has a direct impact on the share base of the company. The equity base of the company increases after the rights issue. Due to this, the liquidity of the company’s shares in the stock exchange increases. There is no change in the ownership of the company. This means that the ownership of the company remains with the same people who were already owners.