Shriram Transport Finance or STFL has fixed Rs.570 per share as the benchmark price for its proposed rights issue. STFL plans to raise a sum of Rs.1500 crore through the rights issue which has been attractively price at an 18% discount to the current market price. Discount on rights is logical as it leads to eventual equity dilution in this case.

The rights ratio has been set at 26:3, which means investors holding 26 shares on the record date of 10 July, will be eligible for three rights shares at the discounted price. The entire price of Rs.570 will be payable upfront on application itself. The promoter group will subscribe to its entire rights eligibility, which should be a solace for investors.

In addition to subscribing to all the rights that the promoters are entitled, they also plan to subscribe to additional equity shares in the rights issue, including any rights entitlements renounced in their favour or in favour of any entities controlled by them. This should be a positive factor and existing investors can look to subscribe to rights at the price.