Sunday, 23 January, 2022
HomeBusinessIndia Inc Raises Over Rs 9 Lakh Crore Via Equity, Debt Issuances...

India Inc Raises Over Rs 9 Lakh Crore Via Equity, Debt Issuances In 2021

Indian firms have mopped up greater than Rs 9 lakh crore by way of fairness and debt routes in 2021

New Delhi:

Indian firms have mopped up greater than Rs 9 lakh crore by way of fairness and debt routes in 2021 to fulfill their renewed thirst for enterprise growth in a buoyant inventory market brimming with liquidity and helped by recovering macroeconomic indicators after pandemic-ravaged first few months.

Except the still-evolving Omicron scenario performs spoilsport, the following yr is predicted to be way more sturdy by way of fund-raising actions and there appears to be no dearth of funds, consultants mentioned.

“The banks have been sitting on surplus liquidity for fairly some time and there ought to be sufficient urge for food for high quality debtors, mentioned Ricky Kripalani, Lead Sponsor, First Water Capital Fund.

Within the yr passing by, fund mobilisation by way of debt markets has fallen sharply, whereas the fairness fund elevating has been sturdy and the inventory market bull-run with liquidity all-around has resulted in file fund-raising by way of preliminary public choices (IPOs).

Regardless of the plunge in fund mobilisation by way of the debt route, it continued to contribute a lion’s share to the general fund-raising exercise in 2021.

Debt fund-raising has slowed due to long-term financial disruptions through the first wave of the coronavirus pandemic, adopted by a protracted affect of the ravaging second wave, mentioned Sandeep Bhardwaj, CEO, Retail, IIFL Securities.

Out of the cumulative Rs 9.01 lakh crore garnered until mid-December this yr, funds totalling Rs 5.53 lakh crore have been mopped up from the debt market, Rs 2.1 lakh crore got here from the fairness market, Rs 30,840 crore by way of actual property funding trusts (REITs) and infrastructure funding trusts (InvITs) and Rs 1.06 lakh crore through the abroad route, knowledge compiled by analytics main Prime Database confirmed.

In 2020, companies raised Rs 11 lakh crore, together with Rs 7.91 lakh crore by way of debt and Rs 2.12 lakh crore by way of fairness.

Explaining larger fund-raising by way of debt route in 2020, Samir Sheth, Accomplice and Head – Deal Advisory Companies, BDO India, mentioned that companies got here to a halt as a strict lockdown was imposed since March 2020 and to handle the opposed affect of the identical, corporates resorted to money owed.

He additional mentioned that the inventory market was down for probably the most a part of the yr and PE/VC markets have been additionally not that lively, leaving companies with few choices apart from a debt funding in 2020.

Contemporary capital was raised by firms for debt cost, to fund capital expenditure for brand new tasks, to help inorganic development like acquisitions as additionally for advertising and analysis and develop functions, mentioned Satyen Shah, managing director and head, Funding Banking at Edelweiss Monetary.

Whereas firms needed to have the liquidity to tide over uncertainties associated to the pandemic throughout 2020, it has been largely associated to financial development in 2021 and companies are elevating funds primarily to broaden, Mr Sheth mentioned.

Of the full Rs 5.53 lakh crore raised by way of Indian debt markets in 2021, Rs 5.38 lakh crore got here from the personal placement and Rs 14,277 crore was by way of public issuance.

“Indian debt markets are principally tapped by the monetary sector firms who use funds for onward lending (because the financial cycle gathers tempo) and increase capital buffers,” mentioned Ajay Manglunia, managing director & head – Institutional Mounted Earnings, JM Monetary.

The non-financial bunch deploys the funds majorly for basic company bills, capital expenditure and capital for inorganic development alternatives aside from refinancing present debt, he added.

Within the fairness market, funds principally got here from preliminary share gross sales as ample international liquidity, sturdy fairness market and large fairness participation pushed the IPO market to new ranges this yr.

Inside the fairness phase, the IPO route helped firms elevate Rs 1.2 lakh crore, certified institutional placement (QIP) route added Rs 41,894 crore, rights challenge of shares to present shareholders accounted for Rs 27,771 crore, whereas provide on the market (OFS) by way of inventory change mechanism contributed Rs 22,912 crore.

A complete of 63 IPOs mopped-up file Rs 1.2 lakh crore, and small and medium enterprise (SME) IPOs introduced in Rs 710 crore.

As compared, Rs 26,613 crore have been raked in by way of 14 main-board IPOs, whereas Rs 159 crore got here through the SME phase in 2020.

Buoyant inventory markets and spectacular itemizing positive factors by some firms have been the principle components driving the IPO frenzy, mentioned Piyush Nagda Head-Funding Product at Prabhudas Lilladher.

IIFL Securities’ Bhardwaj believes that bullish trajectory will proceed in 2022 additionally for the IPO market and the brand new yr may see a brand new file stage of funds raised whereas the mega preliminary share-sale of LIC can be within the offing.

Other than public points, fairness fund-raising by way of QIPs dropped to Rs 41,894 crore in 2021 from Rs 84,509 crore final yr, totally on account of availability of cheaper debt and expectation of excessive valuations as a result of rising markets making promoters hesitant to dilute.

Another excuse for the decline in QIPs fund-raising could possibly be expectations of an extra rise in inventory markets because the markets have been continually rising from the start of the yr until mid-November.

The variety of QIPs in 2021 has been larger than the final yr, however the quantum has been comparatively decrease.

Going ahead, First Water Capital Fund’s Mr Kriplani mentioned that the fund assortment by way of QIPs might decide up because the capex cycle is now reviving and valuations are wealthy.

Funds mobilised by way of the rights challenge mode additionally plunged to Rs 27,771 crore in 2021 from Rs 64,984 crore final yr. Bharati Airtel contributed a serious chunk with its Rs 21,000 crore rights challenge this yr.

The yr 2020 had seen the most important ever rights challenge of Reliance to the tune of Rs 53,000 crore, making this yr look pale as compared.

Nevertheless, funds collected through the OFS route – used for dilution of promoters’ holdings – rose to Rs 22,912 crore this yr, from Rs 20,901 crore in 2020.

As well as, companies took infrastructure funding trusts (InvITs) and actual property funding trusts (REITs) mode for elevating funds and raked in Rs 32,125 crore within the yr passing by, decrease than Rs 38,109 crore mobilized in 2020.

Other than the home route, funds totalling Rs 1.06 lakh crore have been raised by way of abroad bond markets and overseas foreign money convertible bonds (FCCBs), a lot decrease than near Rs 68,000 crore collected final yr.

Going forward, consultants imagine {that a} sturdy funding state of affairs for Indian companies will proceed into 2022 for the fairness in addition to debt routes.

“Contemplating the robust liquidity, Covid scenario being beneath management, constructive company earnings outlook and general India development story. We anticipate traders to proceed to have a look at funding Indian companies,” Mr Shah of Edelweiss Monetary Companies mentioned.

In accordance with BDO India’s Mr Sheth, barring any giant financial affect of Omicron, general financial development and important funding state of affairs for Indian companies will proceed into 2022.

On the subject of debt, IIFL Securities’ Mr Bhardwaj believes important fund-raising by way of debt is more likely to occur within the subsequent few quarters because the economic system is again on observe and personal capex plans selecting up.

Most Popular

English English हिन्दी हिन्दी ਪੰਜਾਬੀ ਪੰਜਾਬੀ