The rights issue of L&T Finance Holdings, a non-banking finance company of Larsen & Toubro Group (L&T Group), has been oversubscribed by 15%. The company had brought this rights issue on February 1 to raise Rs 2998.61 crore and its investments could subscribe to equity shares till February 15. For this rights issue, the company had fixed the price of a fully-paid up equity share with a face value of Rs 10 at a premium of Rs 55 to Rs 65 per share.
For this, L&T Finance Holdings set the rights entitlement ratio at 17:74. That is, the investors who had 74 shares of the company could buy 17 equity shares in this rights issue. Encouraged by the success of this rights issue, Dinanath Dubhashi, CEO of L&T Finance Holdings, said that we thank the investors for their trust in the company.
Listing will be done on 26 February
In this rights issue, the investors whose equity shares were allotted shares in their account will be allotted on 23 February. At the same time, the listing of this rights issue on BSE and NSE will be on February 26. The company will use the funds raised from it to increase its capital and pay for commercial papers. The rights issue was approved by the board of L&T Finance on 9 November.
What is the rights issue?
Companies listed on the stock market bring in a rights issue to raise more capital. Under this, companies allow their existing shareholders to buy additional shares only. Shareholders buy shares under a rights issue on behalf of the company. Under the rights issue, shareholders can buy shares only in a fixed proportion. The company decides this ratio.
Suppose the company has fixed a ratio of 1: 3 for the rights issue. This means that the shareholder can buy an additional share on the 3 shares he already owns. Companies also give discounts to their shareholders for buying shares through the rights issue. This allows shareholders to buy additional shares at lower prices.