Briscoe Group has opted not to take up all its rights in a $145 million capital raise to help fund Kathmandu's acquisition of surfing brand Rip Curl.

The NZX-listed outdoor equipment and clothing retailer has completed an institutional entitlement offer to shareholders with an 88 per cent take-up.

Briscoe, Kathmandu's biggest shareholder with 19 per cent, requested allocation of 5.33 million shares, valued at $13.6m at the issue price of $2.55 a piece.

The share allocation represents just 50 per cent of the company's total entitlement.

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Briscoe's partial share allocation lead to a 12 per cent shortfall to the $110m institutional component of the capital raise. It might have been more were it not for the the rest of the offer being oversubscribed by other existing shareholders and new investors. Gross proceeds of $96m were raised.

The retail component of the capital raise closes on Monday and Kathmandu expects that to bring the total proceeds to $145m.

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Briscoe, which owns and operates Briscoes, Rebel Sports and Living and Giving chain stores, has held a significant stake in Kathmandu since its failed takeover bid in 2015.

Until recently it held a 19 per cent stake in the company, this is now 16 per cent, according to a statement released by the group, despite it taking on an additional 5.3 million shares.

"The total cost of our investment in Kathmandu is now $87.9m and should
represent around 16 per cent shareholding post the retail entitlement offer and the vendor placement," managing director Rod Duke said in a statement.

"The Board considers the level of investment to be at an appropriate level and as the single largest shareholder we continue to maintain a close interest in the company."

Briscoe was "supportive of Kathmandu's initiatives to diversify and grow their business via the acquisition", he said.

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Duke told the Herald the decision to not fully support the latest rights issue was not a reflection of the company no longer being as interested in Kathmandu as it once was.

"We thought our investment in Kathmandu, of $90m, was about where we wanted to be," Duke said. "If we weren't interested or didn't like the deal, then we would of taken nothing and simply sold the 10.6 million shares into the bookbuild.

"If we had taken the lot up we would have ended up with something like 18 per cent [stakeholding in the company], instead we've ended up with 16.2 per cent."

He could not comment on the board's intention to potentially increase shareholding in the future.

"Right now it is a very comfortable investment for us, our entry point is very, very low, well under $2, and we're getting $5 or $6 or $7 million worth of dividends per year so it's way better than having it in the bank."

In 2015, Duke's takeover offer for Kathmandu was ultimately rejected, but through Briscoe he has maintained an interest in the company.

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Kathmandu's takeover of Rip Curl will require shareholder approval, a special meeting to achieve this has been scheduled for October 18. If approved, the transaction is expected to be completed by the end of the year.

The acquisition is expected to lift Kathmandu's earnings by 10 per cent in the 2020 financial year.