Fund raising via debt placement drops 11% to Rs 3 lakh cr

Fund raising by Indian companies through private placement of debt securities or bonds fell by 11% to nearly Rs 3 lakh crore in 2013.

The funds were raised primarily for business expansion and meeting capital requirements.

According to the latest data from capital market regulator Sebi, Indian firms garnered Rs 3,36,396 crore through private placement of debt securities in 2012, compared to Rs 2,99,656 crore last year. In 2011, it totalled Rs 2.43 lakh crore.

In all, 2,073 companies raised funds last year, compared to 2,338 in the preceding year.

Firms issue debt securities or bonds to institutional investors to raise capital under the private placement route.

Market experts said funds raised by companies in 2013 were lower than the preceding year, but firms preferred this route over equity because of a lull in the stock markets.

"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 the domestic companies have opted for debt route as they were not confident of raising funds through equity last year.

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