New Delhi: Indian companies have raised nearly Rs 6 lakh crore from equity and debt instruments in 2018, but volatile market conditions brought down the kitty by 30 per cent and political uncertainties ahead of the 2019 general elections may again cast a shadow on fund-raising activities in first half of the new year. Experts, however, are hopeful the fund-raising will gather steam in second half of 2019 with a pick-up in the overall investment climate. The data shows the debt market remains the most preferred route for raising funds to support business needs of the corporate world.
Out of the cumulative Rs 5.9 lakh crore garnered so far this year from capital markets, a large chunk or Rs 5.1 lakh crore has been mopped up from the debt market and the remaining amount of about Rs 78,500 came from equity markets, figures compiled by data analytics major Prime Database showed.
In 2017, firms had raised Rs 8.6 lakh crore, including nearly Rs 7 lakh crore through debt markets and Rs 1.6 lakh crore from equities. In equity market, funds mostly came from initial public offers (IPOs) and issuance of shares to institutional investors. The final figures may go up to end the year at around Rs 6 lakh crore for debt and equities, experts said. The funds have been raised mainly for business expansion plans, loan repayments and to support working capital, while a large amount raised from IPOs also went to the promoters, private equity firms and other existing shareholders for part or full sale of their investments.
Lack of corporate lending appetite by PSU banks combined with attractive yields in the corporate bond markets over bank rates appear to motivate corporates to shift towards market based borrowing through non-convertible debentures (NCD) issuances for raising funds,” WGC Wealth Chief Investment Officer Rajesh Cheruvu said. Rajendra Naik, MD (Investment Banking) at Centrum Capital said the later part of 2018 has been challenging for equity markets due to both global and domestic factors. “Globally, crude oil price saw almost 20 per cent increase between August-October of this year. Further, bond yield curves have risen during the same period.
“On domestic front, we have seen increase in petrol and diesel prices to all-time high rates and interest rates have also moved up. Also, the impact of IL&FS default and tightening of liquidity for NBFCs had a negative sentiment on the equity markets,” he said. Naik said the state elections in December also kept many investors away, with several factors leading to subdued interest for equities during the year. Of the total Rs 5.1 lakh crore mopped up through placement of debt securities, Rs 4.8 lakh crore came from private placement and over Rs 29,600 crore through public issuance.
