Mazda plans to raise 96 billion yen (£670 million) by selling new shares and treasury stock to fund the development of hybrid and other environmentally friendly cars.
The Japanese firm will issue 363m new shares, which is the equivalent of a quarter of its existing stock. It will also sell 96.8m shares it bought last year from its majority shareholder Ford.
Mazda has lagged behind rival firms Toyota and Honda in producing petrol-electric hybrids and two thirds of the money raised from the sale of the shares would be spent on “environment- and safety-related development”.
The remaining funds raised would be spent on factory upgrades and general capital investment.