 "Capital raising up despite market volatility: Economic Survey")
Despite market volatility, India Inc’s capital raising was strong in the first nine months of the current financial year.
Resource mobilisation by companies through debt or equity, especially initial public offers (IPOs), saw a multi-fold jump for the April to December 2015 period, from the same period last year, to Rs 12,259 crore from Rs 1,420 crore in the comparable period, said the Economic Survey. Overall equity raising rose five-fold, to Rs 20,890 crore from Rs 4,233 crore.
“During 2015-16 (April-December), 71 companies accessed the capital market and raised Rs 51,311 crore, compared to Rs 11,581 crore through 61 issues in the corresponding period of 2014-15,” it said.
The robust activity comes despite a 6.5 per cent fall in the benchmark indices during the period. Experts think the momentum might take a beating, as the markets have fallen a further 11.4 per cent since January.
Resource mobilisation by companies through debt or equity, especially initial public offers (IPOs), saw a multi-fold jump for the April to December 2015 period, from the same period last year, to Rs 12,259 crore from Rs 1,420 crore in the comparable period, said the Economic Survey. Overall equity raising rose five-fold, to Rs 20,890 crore from Rs 4,233 crore.
“During 2015-16 (April-December), 71 companies accessed the capital market and raised Rs 51,311 crore, compared to Rs 11,581 crore through 61 issues in the corresponding period of 2014-15,” it said.
The robust activity comes despite a 6.5 per cent fall in the benchmark indices during the period. Experts think the momentum might take a beating, as the markets have fallen a further 11.4 per cent since January.
“Fund raising activity will be subdued till the market stabilises. We have already seen a pause in IPOs, rights and QIPs (qualified institutional placements) in the past few weeks,” said Girish Nadkarni, managing director, Motilal Oswal Investment Advisors.
Some marquee IPOs were of InterGlobe Aviation, which raised over Rs 3,000 crore from the market, of Alkem Laboratories, which mopped Rs 1,300 crore, and Coffee Day Enterprises, which mobilised Rs 1,150 crore.
Interestingly, capital raising in 2014-15 was subdued despite a sharp rally in equity markets. Experts said the sharp gains had taken everyone by surprise and many companies had not readied their capital raising plans to take advantage of this.
Mridul Mehta, executive vice-president, ICICI Securities, said with the severe market correction, fund raising would be a challenge. “There will be pockets of opportunities for resource raising. Companies will have to be ready to launch their offerings whenever the markets improve,” he said.
“Currently, companies are taking a wait and watch approach, and seeing which direction the market goes post Budget. The sentiment has also been dampened by the underperformance of companies that got recently listed,” said Gautam Gupta, director, Ambit Corporate Finance.
Debt capital raising has remained strong. Companies raised Rs 30,421 crore in April-December 2015, compared to Rs 7,348 crore in the same period last year. Given the risk aversion among investors, more are likely to turn to fixed-income instruments, which could boost capital raising plans through these.
Mobilisation by mutual funds in April-December 2015 also increased substantially, to Rs 161,696 crore from Rs 87,942 crore in the same period of the previous year, the survey said.
Some marquee IPOs were of InterGlobe Aviation, which raised over Rs 3,000 crore from the market, of Alkem Laboratories, which mopped Rs 1,300 crore, and Coffee Day Enterprises, which mobilised Rs 1,150 crore.
Interestingly, capital raising in 2014-15 was subdued despite a sharp rally in equity markets. Experts said the sharp gains had taken everyone by surprise and many companies had not readied their capital raising plans to take advantage of this.
Mridul Mehta, executive vice-president, ICICI Securities, said with the severe market correction, fund raising would be a challenge. “There will be pockets of opportunities for resource raising. Companies will have to be ready to launch their offerings whenever the markets improve,” he said.
“Currently, companies are taking a wait and watch approach, and seeing which direction the market goes post Budget. The sentiment has also been dampened by the underperformance of companies that got recently listed,” said Gautam Gupta, director, Ambit Corporate Finance.
Debt capital raising has remained strong. Companies raised Rs 30,421 crore in April-December 2015, compared to Rs 7,348 crore in the same period last year. Given the risk aversion among investors, more are likely to turn to fixed-income instruments, which could boost capital raising plans through these.
Mobilisation by mutual funds in April-December 2015 also increased substantially, to Rs 161,696 crore from Rs 87,942 crore in the same period of the previous year, the survey said.