Qualified institutional placements, rights issues and non-convertible debentures are back in vogue. At least 30 companies have drawn up plans to raise close to Rs 50,000 crore (Rs 500 billion) through these routes to fund their working capital needs over the next six months.
Investment banking experts and capital market advisors, who are engaged in talks with companies that are looking at fund-raising options, said that while 13 large-cap companies were looking at raising capital to the tune of Rs 30,000 crore (Rs 300 billion) through QIPs, rights issues and NCDs, 20 other companies had initiated talks to raise about Rs 15,000-20,000 crore (Rs 150-200 billion).
"A number of QIPs and rights issues will be announced following the poll results. These issues could be in the range of Rs 200-500 crore (Rs 2-5 billion) each. About 15 companies are looking at raising funds through capital market issuances, which may include at least 5 rights issues," said Anil Ladha, head of capital markets at ICICI Securities.
Apart from Tata Steel, which is on its way to raise about Rs 5,000 crore (Rs 50 billion) through an equity issue, a Rs 3,750 crore (Rs 37.5 billion) issue by Tata Motors, a Rs 4,000 crore (Rs 40 billion) NCD issue by Jaiprakash Associates and a Rs 3,000 crore (Rs 30 billion) QIP by India Bulls Real Estate are some of the largest capital raising plans chalked out by India Inc.
"Private placements appear to be the preferred route for the time being because companies are looking for long-term funds," said Ladha.
At least 10 NCD issuances are expected during the first half to raise a total of Rs 10,000-15,000 crore (Rs 100-150 billion). Most of the forthcoming NCD issues will be floated by non-banking finance companies, according to market sources.
"Apart from NCD issue plans of Jaiprakash Associates, Power Grid Corporation, Tata Motors and Tech Mahindra, there are at least five bond issues coming up in the next few months to raise a total of Rs 3,000-4,000 crore (Rs 30-40 billion).
"If Indian companies succeed in raising Rs 50,000-75,000 crore (Rs 500-750 billion)over the next few months, even if equity markets were to reverse later in the year on global factors or on domestic policy tightening, corporate fundamentals could be on the way for the market to be substantially higher in 2010," said an analyst with Credit Suisse.
