Mothers, daughters, and the Noble Group rights issue

WITH an additional half a billion US dollars just raised from a rights issue, Noble Group shareholders might yet see some light in the middle of a very long and dark tunnel.

Rights issues like Noble's are becoming more common as global growth slows and indebted companies need shareholders to rescue them. Otherwise known as cash calls, rights issues refer to the process of companies giving their investors the opportunity to purchase new shares.

The listing of 6.5 billion new Noble shares on Aug 4 will mark the end of two long months when the beleaguered commodities trading firm went through a process to raise money from its shareholders.

When Noble announced its rights issue on June 3, its shares were at S$0.30 apiece, already down dramatically from over S$1 at …