Fund mop-up via preferential allotment hit 8-month low in August

Fund-raising by issuance of shares to promoters and shareholders on preferential basis has hit an eight month low of Rs 1,062 crore in August amid volatile market conditions.

 

According to the latest data available with the market regulator Securities and Exchange Board of India (Sebi), funds garnered by companies through preferential allotments declined to Rs 1,062 crore in August from Rs 1,605 crore in the preceding month.

 

In May, funds garnered by companies through preferential allotments were as high of Rs 11,878 crore.

     

The August figure has reached the lowest level since January this year, when companies had mopped-up a total of Rs 879 crore via preferential allotments route.

     

However, the number of preferential issues rose to 35 in August from 27 in the preceding month.

     

With the latest capital mop-up, the cumulative mobilised amount through preferential allotment route stood at Rs 30,560 crore through 188 issuance for the financial year 2013-14 so far (April-August).

     

"There were 35 preferential allotments (Rs 1,062 crore) listed at BSE and NSE during August 2013 as compared to 27 preferential allotments (Rs 1,605 crore) in July 2013," Sebi noted.

     

Market participants said capital raised through the preferential allotments of shares have slowed due to tough secondary market conditions but the number of companies that opted for the route has gone up.

     

The sharp fall in fund raising is coincided with about 726 points or 3.75 per cent plunge in the BSE's benchmark Sensex during the month.

 

In the entire financial year 2012-13, companies have garnered around Rs 47,000 crore, marking a sharp rise from Rs 25,709 crore garnered through preferential allotments to the promoters as well as shareholders in the earlier fiscal.

     In 2010-11, companies had collected Rs 30,511 crore through preferential allotments.