India Inc raise Rs 4 lakh cr in 2013; debt market most preferred

Quantum of funds raised by Indian companies from the markets hit a staggering Rs

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4 lakh crore in 2013, with debt market emerging as the most preferred route to garner capital for their business needs.

While there was a lull in the primary stock market -- where the companies raise funds through the sale of shares via instruments like IPOs and FPOs, it was private placement of corporate bonds and non-convertible debentures that was used the most to meet funding requirements of businesses in 2013.

Together, the companies have raised fresh capital worth nearly Rs 4 lakh crore from equity and debt markets this year, shows an analysis of funds raised through various routes.

These funds have been raised primarily for business expansion plans and to meet capital requirements.

A large chunk of this amount or more than Rs 3.10 lakh crore has been mopped up from debt market.

Funds raised from equity market stands at about Rs 87,000 crore, which mostly include those raised by preferential share allotments to promoters and other investors, as also promoter share sale through Offer For Sale route.

Within the debt market, the companies raised Rs 2.65 lakh crore through debt placement route, while Rs 23,745 crore has been mopped up through non-convertible debentures and another Rs 19,650 crore via public issuance of debt securities.

According to market analysts, improving stocks valuations may lead to greater share sales by the companies in 2014, while debt market is also expected to witness robust activities in the new year.

"Indian debts are costly, still companies rushed towards this route for the fund raising activity in 2013 as equity was not available and there was lack of confidence among investors," CNI Research's Kishor Ostwal said.

Echoing similar views, Destimoney Securities' MD and CEO Sudeep Bandopadhyay said companies have opted for debt route as they were not confident of raising funds through equity this year.

Another reason for flocking towards the debt segment to take advantage of the interest rate differential between bank loans and such bonds.

There was a lull in the equity market in 2013 as there was only one big ticket initial public offer (IPO) and one Follow-on Public Offers (FPOs) witnessed during the year.

Just Dail, a search engine service provider, was the only mega IPO that raised around 927 crore in May this year.

The entire year saw just one follow-on offer, by state-run Power Grid Corporation, which also happens to be the biggest public offer of the year with a size of Rs 5,400 crore.

Although, Power Grid's FPO has infused a lifeline in the otherwise dull primary market, many companies like BSE, Shemaroo Entertainment and Great Eastern Energy among others are planning to launch public offers in the coming months.

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