Believe it or not but despite Covid-19 pandemic related hassles, Indian companies mopped up close to Rs 10 lakh cr in 2020. And, you know what, the best part is the bullish trajectory is expected to continue next year too, as per a report by news agency PTI. With most of the developed markets awash with cheap credit, thanks to low interest regimes, entities from emerging markets like India tapped the low cost funding options, the report added. Debt route turned more attractive for many Indian corporates for multiple reasons, including that there won’t be dilution of promoter equity, according to experts.
Out of the cumulative Rs 9.85 lakh crore garnered till December 15 this year, Rs 7.3 lakh crore was mopped up from the debt market, Rs 2.46 lakh crore came from the equity market and around Rs 7,100 crore through the overseas route, data compiled by analytics major Prime Database showed.
Of the total Rs 7.3 lakh crore raised through Indian debt markets, Rs 7.23 lakh crore came from private placement and Rs 7,167 crore was through public issuances.
In 2019, firms raised Rs 10.6 lakh crore, including Rs 7.28 lakh crore through debt and Rs 3.3 lakh crore through equity.
Also, fresh capital has been garnered to fund growth as well as expansion plans, refinance high cost debt and create a war chest of liquidity, while a large amount raised from Initial Public Offers (IPOs) also went to the promoters and shareholders by way of sale of their respective holdings
In the equity market, funds mostly came from issuance of shares to institutional investors and rights issue mode as benign stock markets and better valuations made firms to opt for such routes.
Within the equity segment, Qualified Institutional Placement (QIP) route helped raise Rs 79,086 crore, rights issue of shares to existing shareholders accounted for Rs 64,984 crore, IPOs added Rs 26,472 crore, including for SMEs, preferential issue of shares got Rs 39,484 crore and Offer for Sale (OFS) through stock exchange mechanism contributed Rs 21,256 crore. The share of FPO (Follow on Public Offer) was at Rs 15,024 crore.
A total of 14 main-board IPOs mopped-up Rs 26,313 crore, and Small and Medium Enterprise (SME) IPOs brought in Rs 159 crore. In comparison, Rs 12,365 crore raked in through main-board IPOs, while Rs 624 crore via SME segment in 2019.
In addition, Yes Bank took the follow-on public offer (FPO) route to mop-up Rs 15,000 crore this year, while SME raised Rs 24 crore through the route.
The IPO chart in 2020 was led by SBI Cards and Payment Services Ltd that raised Rs 10,355 crore, followed by Gland Pharma (about Rs 6,480 crore), CAMS (Rs 2,240 crore) and UTI Asset Management Company (Rs 2,160 crore).
Interestingly, this year saw most of the IPOs opening with a premium over the issue price suggesting strong investors appetite. IPOs like Route Mobile, Happiest Minds Technologies, Rossari Biotech and Gland Pharma clocked handsome gains ranging from 40-200 per cent since listing to investors.
Apart from public issues, equity raise through QIPs and rights issues together hit a record level of Rs 1.5 lakh crore supported by accessibility of abundant liquidity.
Fund collection through QIP mechanism more than doubled to Rs 79,086 crore this year from Rs 35,238 crore through the mode in 2019.
Fund raising through QIP route in 2020 was majorly dominated by financial institutions and banks.
Among the major QIPs issuance were ICICI Bank raising about Rs 15,000 crore, Bharti Airtel (over Rs 14,000 crore), HDFC (Rs 14,000 crore), Axis Bank (Rs 10,000 crore) and Kotak Mahindra Bank (Rs 7,442 crore).
Primary capital raised during last couple of quarters have been termed as “COVID capital” wherein equity that was raised were used to strengthen the balance sheet to overcome any financial stress due to COVID-19 and also to take advantage of growth opportunities available.
Besides, firms mobilised Rs 64,984 crore through rights issue this year, which was higher than Rs 52,053 crore raised in 2019.
Reliance Industries contributed the lion’s share, with its Rs 53,124 crore through rights issue. This was also the country’s largest-ever rights issue, as per the PTI report.
However, capital garnered through preferential issuance of equity shares plunged to Rs 39,484 crore in 2020 from Rs 2.04 lakh crore in the preceding year. Also, funds collection via OFS route — used for dilution of promoters’ holdings — fell to Rs 21,256 crore this year from Rs 26,000 crore in 2019.