Difference in Right Issue and OFS

 

A right issue and an offer for sale are two different ways that companies can raise capital in the stock market.

 

A right issue is a type of offering where a company gives existing shareholders the right to buy additional shares of stock at a discounted price. This is typically done to raise additional capital for the company. Existing shareholders are given the first opportunity to buy the new shares before they are offered to the public. The number of shares that shareholders can buy is proportional to the number of shares they already own. The purpose of a right issue is to allow existing shareholders to maintain their ownership percentage in the company, while also providing an opportunity to increase their investment in the company.

 

An offer for sale, on the other hand, is a type of offering where a company offers shares of stock to the public for purchase. This is typically done when the company wants to raise capital, but does not want to issue new shares to existing shareholders. In an offer for sale, the shares are offered to the public at a price determined by the company, which may be different from the market price of the shares.

 

In summary, the main difference between a right issue and an offer for sale is that a right issue is an offering made to existing shareholders to buy additional shares at a discounted price, while an offer for sale is an offering made to the public to buy shares at a price determined by the company.