If you are a shareholder of the telecom company Bharti Airtel, then you have a chance to buy the shares of the company at a discount. Airtel's rights issue will open on October 5 next month and close on October 21. The company plans to raise around Rs 21,000 crore through the rights issue. The fund will be raised at Rs 535 per share with a premium of Rs 230.
Presently the share price of Bharti Airtel is Rs 727. At the same time, in the rights issue, shares will be sold to the shareholders of the company for Rs 535. In this sense, investors will get a good discount per share. According to the company, the record date for the eligibility of the rights issue has been fixed as September 28. Also, the board of directors of Bharti Airtel had on August 29 approved the fundraising of Rs 21 thousand crores through the rights issue.
Companies use rights issue to raise funds. In this, shares are issued to old shareholders at a lower price. The rights issue means that the company is going to do something new. This gives rise to the stock. By the way, some companies also resort to a rights issue to reduce or eliminate their debt.
In a rights issue, shares are sold at a lower price to the old shareholders. That is, those who are already invested in the shares of the company, can buy shares at a discount through the rights issue. For this, the company decides the period and during this period you can buy shares.
Shareholders can buy shares in the rights issue only in a fixed proportion. However, if the company has fixed the ratio of 1:5 for the rights issue, it means that the shareholder will have an opportunity to buy 1 additional share for every 5 shares already held by him. If the ratio is 1:10, then you can buy 1 share for the already existing 10 shares.