Fund mop-up via preferential mode hits 3-yr high of Rs10,485cr

Fund-raising by issuance of shares to promoters and shareholders by companies on a preferential basis has hit the highest level in three years at Rs 10,485 crore in April.
According to the latest data available with market regulator Securities and Exchange Board of India (Sebi), funds garnered by companies through preferential allotments rose to Rs 10,484 crore last month from Rs 1,252 crore in March.
This is the highest level in nearly three years, when the companies had raised a total of Rs 14,987 crore through preferential route in May 2012.
Besides, the number of preferential issues rose to 37 last month from 27 in March.

Market participants said companies are opting for the preferential allotments mode to garner fresh capital as fund raising through this route is fast and less cumbersome.
Under the preferential issue, companies raise money by selling shares to a select group of investors, rather than to the public at large.

Generally, shares are issued to promoters or investors with a longer time horizon, as it comes with a lock-in of one year, analyst added.
In 2014-15, firms had mopped-up a total of Rs 28,260 crore as compared to Rs 46,463 crore raked in the preceding fiscal.
However, the number of preferential issues rose to 419 in 2014-15 from 411 in the preceding financial year.