Why is Top Glove raising fresh equity after repurchasing shares at a much higher price?

FOR a company in the midst of a massive boom in its business, Top Glove has given its shareholders a lot to worry about over the last several months. Just over a week ago, the company sparked a new set of concerns - this time about its capital management prowess.

On Feb 26, after its shares closed at RM5.24, the Malaysia-based maker of rubber gloves said it will issue 1.495 billion new shares to raise up to HK$14.95 billion or RM7.77 billion, and seek a listing in Hong Kong.

Top Glove said the proposed issue of new shares will enable it to "raise fresh capital without having the need to undertake a cash call from its existing shareholders". It said the Hong Kong listing would widen its investor base and strengthen its position to raise capital in the future.