Fund raising via preferential allotment declines 65% in May

The decline in fund raising is coincident with BSE's barometer index Sensex surging 1.31%, in May

Fund-raising by issuance of shares to promoters and shareholders on preferential basis has plunged by 65 per cent to over Rs 4,000 crore in May.

According to the data available with market regulator Sebi, companies raised Rs 4,170 crore through preferential allotments in May as compared to Rs 11,844 crore in April.

However, the number of preferential issues jumped to 56 in May from 37 in the preceding month.

With the latest capital mop-up, the cumulative mobilised amount through preferential allotment route stood at Rs 16,014 crore for the financial year 2013-14 so far.

"There were 56 preferential allotments (Rs 4,170 crore) listed at BSE and NSE during May 2013 as compared to 37 preferential allotments (Rs 11,844 crore) in April 2013," Sebi said.

Market participants said capital raised through the preferential allotments of shares have slowed down in May because of volatility in the secondary market but the number of companies that opted for the route has gone up.

The decline in fund raising is coincident with BSE's barometer index Sensex surging 256 points, or 1.31 per cent, in May.

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 past fiscal.

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