Published: Thursday, 16 Jul 2009 | 11:21 PM ET

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Electronics conglomerate NEC Corp is considering raising about $2.1 billion, a source familiar with the matter said, joining a rush of Japanese companies tapping a resurgent equity market for funds.

Shares of NEC tumbled 9.8 percent to 285 yen as investors worried the capital raising would dilute the value of their holdings. The benchmark Nikkei 225 Average

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NEC is considering raising about 150 billion yen (US$1.6 billion) in a public share offering and 50 billion yen in hybrid securities, according to the source, who was not authorized to speak publicly about the fund raising plans.

A 150 billion yen public offering at the current market price would boost its number of outstanding shares by a quarter.

The company said in a statement that no decisions have been made on any capital raising, responding to an earlier report in the Yomiuri newspaper that it may raise about 150 billion yen in funds. A company spokesman declined to elaborate.

NEC needs capital to help pay for the restructuring of chipmaking unit NEC Electronics, which is planning to merge with rival Renesas Technology Corp, as well as to fund growth areas such as lithium-ion batteries, the Yomiuri said.

The global economic slowdown pushed NEC to a net loss of about $3 billion in the past financial year, driving its shareholders' equity ratio to just under 21 percent, roughly half that of rivals Sharp and Panasonic.

NEC would join a growing list of Japanese companies raising funds following a sharp rally in the stock market off a 26-year low in March.

Rival electronics conglomerate Toshiba sold about $3 billion worth of stock in May, and Japanese companies in total issued $17.4 billion worth of new shares in the first half, a five-fold jump from a year earlier.

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