A Foreign Currency Convertible Bond (FCCB) is a type of convertible bond issued in a currency different than the issuer's domestic currency.
The easing of external commercial borrowing (ECB) norms by the Reserve Bank of India (RBI) is expected to significantly boost overseas fundraising by Indian companies, market participants said.
Debt-ridden telecom operator Vodafone Idea on Thursday said its board has approved raising of up to Rs 14,500 crore, including Rs 4,500 crore from promoter entities. An amount of Rs 10,000 crore would be raised by way of sale of equity or through debt instruments such as ADR, GDR and FCCBs. In a regulatory filing, the company said the board has cleared issuance of up to 338.3 crore equity shares of face value of Rs 10 each at an issue price of Rs 13.30 per equity share for an aggregate consideration of up to Rs 4,500 crore.
Lord Jo Johnson, younger brother of former British prime minister Boris Johnson, has resigned his non-executive directorship of a UK-based investment firm linked with the now-withdrawn Adani Enterprises Follow-on Public Offer (FPO). 'The Financial Times' newspaper referenced UK Companies House records to reveal that 51-year-old Lord Johnson had been appointed as a director of London-based Elara Capital Plc in June last year and resigned on Wednesday, the day when the Adani Group announced withdrawal of the FPO. Elara, which described itself as a capital markets business raising funds for Indian corporates, was among the bookrunners on the FPO.
Reliance Infrastructure Ltd on Wednesday said its shareholders have approved raising funds up to Rs 550.56 crore through issuance of shares on a preferential basis. The funds raised would be utilised for long-term resources, for general corporate purposes and to fund future growth, the company said in a regulatory filing.
The rupee's fall is likely to put company promoters who raised money through foreign currency convertible bonds (FCCBs) in a spot.
Himachal Futuristic Communications Ltd converted 64 foreign currency convertible bonds of $ 50,000 each into 58,70,769 shares of Rs 26 each.
After recovering from issues such as defaults on foreign currency convertible bonds and piling debts, pharmaceutical major Wockhardt has been on the slow lane through the last six months, following warnings from global regulators such as the US Food and Drug Administration (FDA) and the UK Medicines and Healthcare Products Regulatory Agency.
Indian firms raised the money via external commercial borrowings.
The company will use the proceeds to fund its expansion plan and repay debt.
Bondholders rejects the company's proposal seeking four-month extension to repay debt of nearly $221 million. Group chief financial officer Kirti Vaga expects an acceptable solution at the earliest.
The latest crisis in the form of default to bondholders can be a crippling blow.
Defending the new foreign investment guidelines released this week, commerce and industry minister Kamal Nath said on Friday the norms would not distinguish between different forms of foreign capital.
Embedded redemption premium and 36 per cent depreciation in five years will realise forex losses worth Rs 67.2 billion.
As many as 126 deals were carried out in which borrowers raised the money through external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs), according to the data released by RBI.
Facing huge redemption pressure on funds raised via foreign currency convertible bonds (FCCBs), India Inc has requested the Reserve Bank of India (RBI) to allow companies to offer higher interest rates on fresh foreign currency loans or bonds, the proceeds of which will be used to pre-pay existing FCCBs.
Mallya had bought the pedigree scotch major, based in Scotland, for $1.2 billion in 2007.
Mumbai-based business process outsourcing firm Firstsource plans to sell US-based MedAssist, a health care business it acquired in 2007. Firstsource had paid $330 million for the acquisition.
Only five Indian companies would be in a position to choose most available redemption options for their foreign currency convertible bonds (FCCBs), due for redemption this year, according to a report by Fitch. The rating agency said of the $7 billion FCCBs, 20 per cent were likely to face a default, owing to the stressed liquidity position of the companies.
Around $1.54 billion was raised by 60 companies through the automatic approval route, which does not require the approval of RBI or the government, while $520 million was raised by the Exim Bank under the approval route, to meet its lending requirements abroad.
The Reserve Bank of India (RBI) has said it expects several companies which have raised money through foreign currency convertible bonds (FCCBs) to face severe funding problems in the next two years due to lacklustre equity markets.
The government has decided to do away with the various classifications of foreign investments for the purpose of calculating foreign investment in downstream companies.
Indian companies raised over $3.41 billion overseas in December through external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs), the Reserve Bank of India (RBI) has said.
After cheap toys, consumer goods and other manufactured products, cheaper loans could be the next major Chinese import into India, and the credit may go to a potential FCCB crisis looming large over Indian corporates.
Indian companies have raised over Rs 3.13 lakh crore up to September, excluding foreign currency convertible bonds (FCCBs) and external commercial borrowings in September. This is close to the cumulative Rs 3.14 lakh crore raised in 2009.Inc's highest fund mobilisation was in 2007, when it mopped up over Rs 3.20 lakh crore.
United Spirits Ltd (USL), flagship spirits company of the UB Group, has finally decided on foreign currency convertible bonds (FCCBs) to raise as much as $225 million (Rs 1,190 crore). The plan is to raise up to $175 million, plus an over-allotment option of $50 million.
Iron ore exporter Sesa Goa said on Friday it would raise Rs 6,000 crore by issuing various securities in domestic and overseas markets for funding its business plans.
GMR Infrastructure on Tuesday said it plans to raise Rs 50 billion (Rs 5,000 crore) by selling shares in domestic as well as international markets.
Experts say that until the market bounces back to a respectable level and creates confidence among investors, who could look forward to some price appreciation, IPOs will not be successful.
While ECBs are pure loans, FCCBs have an in-built option for the lender to convert them into equity of the companies on maturity. Both in ECB and FCCB, till maturity, the borrower is expected to make interest payments on the amount borrowed. Incidentally, the AAR ruling of October 10 had been sought by a non-banking finance company. Till October 31, NBFCs were not allowed to borrow funds from overseas in foreign currency.
Both advertising growth and investments into the business have been lackadaisical. It, therefore, seems to be a good time to look at the pattern of investments into the M&E industry over the last three years.
Hyderabad-based ICSA (India) is divesting 14 per cent of its stake to Citigroup Venture Capital International Growth Partnership Mauritius for $30 million
Telecom infrastructure major GTL Infrastructure will use its Rs 2,200 crore cash reserves to buy back foreign currency convertible bonds.
There are few deals where the buyer and the seller both walk away happy. The SpiceJet deal is one, where each side had a price point for reference.
Promoters or issuers of foreign currency convertible bonds may be allowed to buy back the bonds if they go in for prepayment.
Tata Steel and Anil Ambani-led& Reliance Communications raised $1.375 billion through overseas borrowings and convertible bonds in September, according to data released by the Reserve Bank of India. Tata Steel, which early this year acquired Anglo-Dutch firm Corus to become the sixth-largest maker of the alloy, raised $875 million for overseas acquisition through foreign currency convertible bonds.
Confirming this, Chief Financial Officer S Venkatesan said that the company has passed an enabling resolution to raise around $200 million from foreign investors either through an FCCB or a private placement.
Indian companies had raised $2.39 billion from foreign markets in May 2015.
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