Fund mop-up via preferential route tumbles 48% in May: Sebi

Firms raised Rs 5,407 cr via this route in May, versus Rs 10,485 cr in April; number of issues down to 30 from 37

Raising funds through issuing shares to promoters and shareholders on preferential basis plunged by 48 per cent to Rs 5,407 crore in May due to volatile market conditions.

After touching 3-year high of Rs 10,485 crore in April, funds garnered by companies through preferential allotments fell to 5,407 crore in May, as per the latest data of the Securities and Exchange Board of India (Sebi).

The April figure marked the highest level of fund raising since May 2012, when companies had mobilised a total of Rs 14,987 crore through preferential route.

Besides, the number of preferential issues dropped to 30 in May, from 37 in the preceding month.

Market participants said fresh capital raked in through preferential allotments mode has declined due to volatile market conditions.

Under the preferential issue, companies raise money by selling shares to a select group of existing 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 said.

"The cumulative amount mobilised through preferential allotments route during 2015-16 (April-May), so far, stood at Rs 15,891 crore," Sebi noted.

In the entire 2014-15 fiscal, 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.