Private placement of listed debt securities seems to be emerging as a preferred fund-raising option for companies as they have mopped up Rs 2.37 lakh crore through this route since beginning of current fiscal.
Indian companies have raised a total of Rs 2,37,405 crore till November 30 in the current financial year 2012-13 —— marking a sharp increase of 51.56 per cent from the year-ago period, as per the data compiled by capital market regulator Sebi.
In private placement of debt, companies issue debt securities or bonds to institutional investors to raise capital.
In the April-November period of the previous fiscal, the total amount raised through this route stood at Rs 1,56,634 crore. However, the number of such placements declined to 1,613 in 2013—13 from 1,172 in the previous fiscal.
Market experts believe that domestic bond market saw greater demand for funds compared to a year ago because little borrowing was done through international routes.
“Many Indian companies are turning to the bond market to raise funds because overseas money through foreign currency convertible bonds (FCCB) and External Commercial Borrowing (ECB) route is not available.
“Besides, many firms default on their FCCBs so private placement of debt is the only viable option,” CNI Research CMD Kishor Ostwal said.
The situation seems to have improved in the current fiscal, with an increase in the number of debt issues in comparison to year—ago period likely because companies were finding it difficult to raise funds from other routes.
In the entire fiscal 2011—12, companies had raised a total of Rs 2,61,282 crore through debt on a private placement through 1,953 issues.
Most of the funds raised in the current fiscal were mainly in the month of July, when companies had raised Rs 57,745 crore followed by August (Rs 34,892 crore).