Lexis Nexis recently launched their Market Tracker Trend Report on Trends in Rights Issues, which examines current market trends in respect of rights issues in 2014 and in Q1 2015.
I was asked to provide expert commentary on the points through-out the report, such as how in 2014, 38% of rights issues were for debt repayment, 6% were to fund working capital but that 56% were to fund acquisitions: “Rights issues have traditionally been associated with raising finance in challenging conditions however, in 2014, rights issues were frequently used to fund large acquisitions – which reflects the ABI’s preferred structure for large dilutive fundraisings.”
The Market Tracker Trend Report also looks at acceptance levels, discounts, underwriting and fees paid. Looking at the outlook for 2015/2016, I continued “We expect the trend of rights issues being used to fund acquisitions to continue in 2015/2016 and it is positive that fewer rights issues are being used to fund rescue fundraising. However, where rescue financing is the reason for the rights issue, we expect these to be even more deeply discounted."