Shares were down 2% at 214.8p in early trading and closed the day 1.4% lower.
The shortfall in demand for the discounted shares was partly blamed on market and political uncertainty.
It means underwriters Morgan Stanley, HSBC and BNP Paribas are having to raise about £90m by attempting to sell the unsold new shares or acquire the stock themselves.
That means the setback will not affect M&S’s investment plans.
It is the first time the FTSE 100 stalwart has taken part in such a fundraising effort and the 85% take-up is below the average 91% achieved by comparable rights issues over the past 12 months.
The shortfall is partly attributed to the fact that the company has a large base of individual retail shareholders – representing just over a tenth of the stock.
These investors are seen as less likely to participate in such fundraising efforts than large financial institutions who own the biggest chunks of most listed companies.
It comes after M&S narrowly avoided falling out of the FTSE 100 – for the first time since the index began in 1984 – in a recent reshuffle.
M&S faced investor backlash in February, when the £750m joint venture with Ocado to deliver the retailer’s food to homes for the first time was confirmed.
The chain had previously indicated a greater focus on food through its plans to close non-performing stores as the popularity of shopping through digital channels gathers pace.
The deal was a major investment in online retail for M&S, as in-store fashion and homeware offerings continued to struggle.
Independent retail analyst Nick Bubb said M&S saw a “reasonably good” response to the rights issue.
He added: “Despite all the bad vibes about current trading and the second thoughts in some quarters about the wisdom of the Ocado deal, the £600m rights issue was sizeable enough to preserve M&S’s fragile hold on its place in the FTSE 100 index in the recent review and it was deeply discounted enough to encourage a reasonably good take-up from shareholders.”
But Russ Mould, investment director at broker AJ Bell said that whether M&S’s plan to work with Ocado to boost the retailer’s online service was the right one or not remained to be seen, as Ocado’s food service operation has failed to consistently make a profit.
He said: “Given how far the shares fell during the rights issue process, you could almost see an 85% acceptance rate as a pretty decent result – even if it isn’t really.
“Investors are clearly yet to fully buy in to the message provided by chair Archie Norman and chief executive Steve Rowe that M&S should be judged by the current pace of change within the organisation, not its financial results.
“But with like-for-like sales down, another year of very low profits on a stated basis, once you account for restructuring costs, and a dividend cut staring right at them, some investors were clearly wary of committing fresh cash to the cause, especially as the Ocado joint-venture plan remains a bit of a gamble.”
Laith Khalaf, senior analyst at Hargreaves Lansdown said: “M&S is still a business in the midst of a turnaround and there is some scepticism around whether it’s going to come out the other end firing on all cylinders, or still in need of further remedial attention.
“I suspect many investors probably accepted the dilution of their stake in the business rather than throwing more hard cash into M&S, particularly now the dividend has been cut.”