Module III· ECM — Follow-on, ABB, Rights IssueAdvanced
Question
What are the pros and cons of a rights issue versus a marketed follow-on offering?
Answer
Rights issue protects existing shareholders and can raise large amounts with pre-emption rights, but is slower, more complex, and often visibly discounted. A marketed follow-on can be faster and target new investors, but may dilute non-participants and require a discount. Choice depends on size, urgency, shareholder base, legal constraints, and market conditions.