Firms' foreign fund appetite rising: Report

Buoyed by robust economic growth and an international expansion spree, India Inc's quest for cheaper and quicker global money is growing at an unprecedented pace.

Since 2002, India firms have shown nearly five-fold growth in money raised through external commercial borrowings, American depository receipts and global depository receipts as they raised $16,003 million last year from international markets.

As per a report by The Economist Group, Indian firms are tapping overseas investment funds as they witness lower cost, greater flexibility, speed and depth at the international financial markets.

In the report titled Funding India : Opportunities in international markets, the Economist Intelligence Unit researchers have given a forecast that offshore funding in the country would become more prevalent as it expects India's savings-investment gap to widen in 2007.

In 2005-06, the Indian companies placed ADRs and GDRs worth $2,552 million, which was a four-fold growth compared with $613 million previous year and their total external commercial borrowing stood at $13,451 million, making a total of $16,003 million.

Interestingly, in 2001-02 Indian firm's had raised a total of $3,161.

The report also observed that Indian firms are tolerating exchange-rate risks, which has encouraged use of ECBs over FCCB.

"Moreover, the documentation and regulatory approval processes for overseas financing are often quicker and easier than those to raise funds at home. Indian companies can also increase their "visibility" abroad, a factor that is gaining in importance as they do more business outside the country," it added.