Equity markets: When rights go wrong

Deep water: Italian oil and gas firm Saipem

The business of helping public companies raise new equity capital is hardly the stuff of radical innovation. And the most traditional and conservative method of all, the rights issue, should not be controversial.

So when the banks underwriting a $407 million rights issue by South African platinum miner Lonmin in December 2015 were left with a stick of unsold shares even after completing a rump placement, many in the market were left scratching their heads.