Encouraged by a bullish market, a large number of companies are lining up to raise funds through issuance of shares and other securities with at least five of them having announced plans in the past fortnight to garner over Rs 15,000 crore.
These plans started taking shape soon after a decisive electoral mandate emerged on May 16. The new government led by Prime Minister Narendra Modi bolstered market sentiment, spurring fund-raising activities.
Companies which have already announced plans to raise funds include HDFC Bank, Jaiprakash Power Ventures, United Bank of India, BF Utilities and Amtek Auto. All these firms, barring United Bank, have received their respective board's approval.
Besides, many other companies have begun discussions with investment bankers and their internal teams for garnering funds through routes such public offers of shares, convertible debentures and other securities.
There has been a sharp surge in the secondary markets in recent weeks with the BSE Sensex already scaling new peaks on a regular basis and the landslide victory by the BJP-led National Democratic Alliance (NDA) in the general elections.
It is widely expected to further perk up investor sentiment as the government is likely to rolls out economic reforms.
The firms are also looking to mop up funds from domestic and foreign investors through various avenues like qualified institutional placements (QIPs) and External Commercial Borrowings (ECB) with rights of conversion into shares.
Other routes for companies would be Foreign Currency Convertible Bonds (FCCBs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs), Follow-on Public Offer (FPO) and optionally or compulsorily convertible redeemable preference shares among others.
"The environment for fund raising is turning positive as benchmark indices, S&P BSE Sensex and CNX Nifty, have been making new highs, confidence among institutional investors is back. This is the right time for firm looking to raise funds from the equity market and other instruments," Geojit BNP Paribas Financial Services Head of Research Alex Mathew said.
Individually, HDFC Bank, plans to raise up to Rs 10,000 crore by way of issuing fresh equity shares to domestic and foreign investors over the next one year.
Jaiprakash Power Ventures plans to garner funds through various domestic/international options including QIPs or ECBs with rights of conversion of shares of up to Rs 3,000 crore.
The money will be used for ongoing projects and reducing debt.
KolKata-based United Bank plans to garner Rs 1,000 crore through a public or rights issue or QIP. Additionally, it may collect Rs 300 crore by way of allotting preferential shares to Life Insurance Corporation of India (LIC).
BF Utilities, a part of Kalyani Group, is looking to raise up to Rs 500 crore through avenues like QIP, rights issue and preferential allotment.
Besides, Amtek Auto plans to mop-up fresh capital through a QIP and other equity-linked instruments. However, it did not disclose about the amounts to be raised.