Riding on the back of a growing global appetite for Indian securities, rising domestic interest rates and robust worldwide liquidity position, India Inc raised about $13.29
billion from overseas debt securities through August this year, with a major chunk coming through Foreign Convertible Currency Bonds. Indian companies raised about $13.16 billion (Rs 60,218 crore) in the entire 12-month period last year.
Major companies that have raised funds abroad through FCCBs this year include Ranbaxy Laboratories ($400 million), Jubilant Organosys ($ 200 million), Mahindra &
Mahindra ($ 200 million), India Cements ($ 75 million) and Larsen & Toubro ($100 million). Besides FCCBs, other debt securities like Eurobonds and syndicated loans have also seen significant growth this year.
FCCBs have further cemented their position as the preferred overseas fund raising instruments and total capital raised from them could surge by about 80 per cent this year.
According to investment banking major Barclays Capital, companies raised about $5 billion through FCCBs issue in the January-August period this year, as against $ 3.9 billion in entire 2005.
Funds raised through FCCBs could surge to $6.5-7 billion (around Rs 32,000 crore) this year, registering a growth of about 80 per cent over 2005, Barclays said.
The sharp jump in Indian companies' overseas fund raising was primarily driven by the need to fund their overseas expansion and acquisitions, it noted.
Besides, the need to expand the investor-base, the ability to raise funds at competitive rates on account of high demand for Indian securities and the improvement in the credit rating are also contributing to the surge, it added.
Companies have already raised close to $1.1 billion through Eurobonds, while syndicated loans account for about $7 billion through August. India Inc had raised over $1.3 billion through Eurobonds and about $ 7.8 billion through syndicated loans in 2005.
Out of a total of about $5 billion raised through FCCBs in January-August period, Barclays' share was $1,257.24 million, while that from Eurobonds and syndicated loans was $200 million and $ 309.40 million respectively.
106 Indian companies raised Rs 75,458 crore (Rs 754.58 billion) was raised by from the overseas markets in 2005 - 88 per cent higher than 2004. Out of 106 companies that hit overseas markets to raise funds as many as 93 companies accessed the debt and FCCB markets, including 33 mid-cap companies.
Companies like Jaiprakash Associates, Aurobindo Pharma, Amtek Auto and Graphite India raised funds in 2005 from the overseas market for the first time through FCCBs.
Strong corporate growth and buoyant liquidity in international markets have further strengthened the position of FCCBs as a major fund-raising instrument abroad, the analysts said.
