Riding on India's sustained growth story, corporates have shifted gear to the fast lane in fund raising, particularly from foreign sources, during the just concluded quarter. Even on the domestic front the pace is picking up.
India Inc has raised about 59 per cent more funds in the just concluded quarter than it did in the first half year from domestic sources, at Rs 465,500 crore, while its sourcing of foreign funds rose over 216 per cent at Rs 107,706 crore ($24,106 million), according to Bloomberg League Tables.
Most of this growth has come from foreign and domestic syndicated loans and continued growth in equity offerings in general.
"The Indian corporates are taking advantage of lower interest rates prevailing in advanced countries in the wake of providing stimulus to their sagging economies. Stronger rupee is also helping foreign sourcing of funds by curtailing exchange losses," said Sharad Rathi, head-investment banking of Almondz Global Securities.
For the first nine months of 2010, the overall funds mop-up rose 50.39 per cent over the previous year, to over Rs 5.73 lakh crore. Domestic sources, such as equities, bonds and syndicated sources cornered over 81 per cent share of overall mop-up or Rs 4.65 lakh crore, while foreign sources like equities, foreign currency convertible bonds and syndicated loans amounted to Rs 1.08 lakh crore.
Indian companies have sold Rs 75,300 crore worth of equity in 112 deals this year till September through shares and rights offerings. A total of Rs 12,900 crore was raised through 32 issues during the third quarter 2010. SKS Microfinance's IPO was the largest, raising Rs 1,628.7 crore. The number of IPOs doubled in the September quarter of 2010, compared to the same period in 2009.
With the BSE Sensitive index (Sensex) regaining the 20,000-points mark, more domestic equity offerings are expected to hit the market. "Smaller public sector units (PSUs) have raised funds from the market till now. With the market touching its 32-month peak, the Centre wants bigger PSUs to hit the market in the coming months," said A. Murugappan, head- equities of ICICI Securities (I-Sec).
I- Sec was one of the toppers in domestic bonds and QIP distribution during the first nine months of the year. Kotak Investment Banking, Enam and SBI Securities topped the IPO charts, while Bank of America Merrill Lynch, IDFC Capital and JP Morgan topped the qualified institutional placements (QIPs) list.
Though even private promoters are trying to make hay while the sun shines ( high prices for their stocks), large PSU issues are expected to add up to the volumes. The large PSU issues that are expected to hit the market in the next six months include Shipping Corporation, Hindustan Copper, Power Grid, Coal India, ONGC and IOC.
" Big private issues in the pipeline include Jindal Steel and Emaar-MGF, the Indian arm of the Gulf-based builder (which had to withdraw its offer due to adverse market conditions in February, 2008)," Murugappan added.
With the economy returning to the high growth path of over 8.5 per cent, there is an expectation of an overall bullishness in the primary market, both through domestic and foreign sources.
"Foreign and hedge funds are investing vigorously in India, riding on the high growth story. All the segments of the primary market are expected to see heightened activity in the next few months, if not more," Rathi of Almondz added.
Courtesy: Mail Today