Must Know Things before Investing In Rights Issue
Bangalore: It is awfully easy for investors to get tempted by the prospect of buying discounted shares with a rights issue. The companies offer new shares to the existing share holders at a lower price to raise further capital for financing acquisitions or to fund new projects. This process is generally termed as rights issue.
Therefore if you are planning to invest in rights issue stocks, here are five must know things, listed by Economic Times.
Why Are Rights Issue Stocks Offered?
Companies offer rights issue when they require capital to fund their acquisitions etc. A rights issue is an issue of rights to buy additional securities in a company made to the company's existing security holders.
When they are offered for equity shares, in public company, this is a means of accumulating capital under a seasoned equity offering. With the issued rights, existing security-holders have the privilege to buy a specified number of new securities from the firm at a specified price within a specified time.
