Fund raising through private placement rises further

Private placement involves parking of bonds with limited number of investors as opposed to a public issue wherein anybody can subscribe to same

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The amount of money corporate raise through the private placement of bonds has gone up in the first quarter of the current financial year, a continuance of the rising trend which saw a record amount raised through the route last year.

A total of 109 institutions and corporates raised a total of Rs.87,840 crore in the first quarter of the year, a rise of 11% over the Rs. 78,960 crore mopped up in the same quarter last year, according to statistics from Prime Database.

Private placement involves parking of bonds with a limited number of investors as opposed to a public issue wherein anybody can subscribe to the same. Various entities used the route to raise Rs 3.52 lakh crore in FY13, the highest in at least twelve years.

Pranav Haldea, Managing Director of PRIME noted a change in trends in favour of private sector companies in the latest numbers.

“…mobilisation by the private sector witnessed a significant increase; it went up by 32% to Rs 38,108 crore compared to Rs 28,939 crore in the corresponding period of the previous year,” he said in a press statement.

Public sector undertakings or PSUs reduced their use of the route. It was down 45% from Rs 10,300 crore in the last quarter last year to Rs 5,626 crore this time.

The share of fund raising by government organizations and financial institutions dropped from 63% in the same quarter last year to 57% this year.