India Inc’s equity fund raising activity surged to a four year high this fiscal, with companies seeking to list on stock exchange and those already listed tapped markets sensing a turnaround in economic cycle.
In all, companies raised a little over R71,000 crore in the 11 months of FY15 (April-March) through various equity instruments for capex as well as debt repayment following a historic win of the Narendra Modi-led NDA party in the national elections of April-May.
Indian firms mobilised a total R30,448.63 crore in FY14, R55,653.50 crore in FY13, and R30,339.27 crore, data compiled by Prime Database showed.
“Indian corporates have been encouraged by the positive sentiments prevailing in the secondary market. A new stable government at the Centre and expectations of higher economic growth have increased investors’ appetite,” said Ajay Saraf, ED and head corporate finance and institutional equities, ICICI Securities.
Indian companies raised a record R1.041 lakh crore in FY08, when the Sensex came close to touching 21,000 in January 2008, Bloomberg data shows. The next big fund-raising took place in FY10, when Indian companies raised R94,848 crore. The Sensex crossed 21,000 for the first time in November 2010, data showed.
Capital market experts say that more companies will queue-up for fund raising as investor sentiment strengthens. Based on the board resolutions, stock exchange notifications and discussions with market intermediaries at present, Indian companies are estimated to raise about R60,000-70,000 crore. In addition, the government aims to raise R69,500 crore by way of disinvestments next financial year.
“The IPO pipeline is strong and healthy, with several quality issuances. There will be gradual pick-up in IPO during the year,” said V Jayasankar, senior ED and head equity capital markets, Kotak Investment Banking.
Jayasankar foresees fund raising through IPOs at R30,000 crore, while QIPs and FPOs is pegged at roughly R50,000 crore next fiscal.
Fund-raising activity will be witnessed across sectors and equity segments, but banks will be at the heart of it, in anticipation of a pick up in loan demand in Asia’s third-largest economy.
Country’s largest lender, SBI alone intends to raise R15,000 crore and recently received shareholder nod.
Indian banks’total capital requirement at over more than $200 billion (about R12.28 lakh crore at current exchange rates), of which state-owned banks will account for 85% share, said a Fitch report on Indian banking capital raising.
“You may not be able to fix the time frame on this but estimate suggests that roughly $12-13 billion will be raised until December 2015 by Indian companies. There is appetite among investors,” said a head of an international investment banking firm, without wanting to be identified.