India Inc’s equity fund raising rose to a five-year high in FY15 as companies rushed to raise money for corporate expansion as well as debt reduction, sensing a turnaround in the economic cycle following the general election results.
Companies raised a little over R90,124.38 crore from public investors in 12 months of FY15, up 105.64% from the previous fiscal. The number could touch the six-digit mark if bulk/block deals on the stock exchanges are taken into account.
Indian firms mobilised a total R34,173.2 crore in FY14, R55,917 crore in FY13 and R30,391 crore in FY12, data compiled by Prime Database showed.
The government sold 10% stake in public sector company Coal India worth R22,557.3 crore — the biggest equity offering in Indian markets.
Barring the disinvestment, other marquee deals took place, such as the private placement to institutional investors by HDFC Bank (R10,000 crore), Yes Bank (R2,942 crore), Idea Cellular (R3,000 crore) and rights issues by Tata Power (R2,000 crore) and Indian Hotels (R1,000 crore).
Industry observers said Indian corporates were encouraged by positive sentiments in the secondary market. While opinion polls encouraged companies to queue up, they started acting only after actual results were declared.
The NDA won 334 out of 543 seats, prompting many India-based and foreign brokerage houses to raise their weightage on equity markets, eyeing decisive governance, market-based and friendly economics and a focus on growth, jobs and investment.
Thirteen out of 16 opinion surveys conducted since January 2013 had predicted BJP-led NDA’s victory.
“The India story is definitely back. Sentiments significantly changed after the outcome of the elections and there is a much stronger belief in India’s economic prospects going forward than before the elections. Quality deals will always find buyers and the fund raising momentum will remain strong,” said Sanjay Bajaj, MD & ECM Head, HSBC Securities and Capital Markets (India).
The qualified institutional placement category saw a near two-fold jump in value. More than R27,000 crore were raised by issuing shares to institutions. Even the primary markets saw robust activity. Eight companies tapped the market, raising nearly R3,000 crore compared with just one company hitting the market last year.
“The mood has improved and improved for good. It is not only because of the market, but also the renewed confidence in our economy, which is encouraging corporate houses to tap capital markets,” said the head of a top foreign investment banking firm, not willing to be quoted due to compliance reasons.
