Indian cos race to smash fund-raising records

The capital market is set to create a record in fund mobilisation in 2007. In another reflection of the growing confidence of India Inc

The capital market is set to create a record in fund mobilisation in 2007. In another reflection of the growing confidence of India Inc, companies raised more in the first six months of 2007 than what they raised in the whole of 2006.

According to data collated by Bloomberg, Indian companies mobilised Rs 31,400 crore through initial public offerings, follow-on offers and qualified institutional placements (QIPs) during the first half of 2007. Consultancy firm Ernst & Young had last week said Indian companies mobilised a total of $7.23 billion (Rs 30,000 crore) in net proceeds in 2006 as against $246 billion raised globally in 2006, making it the eighth largest IPO market in the world. This was the highest in a year so far.

Investment bankers are quite optimistic about the next six months of the year. “We expect good investor response to equity issues. There is unlikely to be any bunching of issues,” said DSP Merrill Lynch chairman Hemendra Kothari.

The high fund mobilisation in the last six months was possible due to Rs 20,000 crore raised by DLF and ICICI Bank in June. If announcements and plans made by corporates are anything to go by, another Rs 30,000 crore is likely to be raised in the remaining six months of 2007. “This will be almost equivalent to the total mobilisation in the last four or five years,” said an investment banker.

Banks which are in a hurry to meet Basel II capital adequacy norms are set to dominate the market in the second half. SBI itself is planning to raise Rs 15,000 crore from the market before year-end. Others like HDFC Bank and UTI bank have also announced mega fund-raising plans. “The success of the primary market will depend on the secondary market. If the stock market remains bullish, IPOs will also do well. The Sensex will scale the all-time peak soon,” said stock dealer Pawan Dharnidharka.

According to Bloomberg, there’s a quantum leap in the amount raised through overseas offerings (depository receipts). Indian companies raised $4.847 billion through DRs as against $1.3 billion previously. This was largely due to ICICI Bank which raised $2.14 billion and Sterlite Industries ($2 billion) in June. However, domestic bond issues by Indian companies were marginally down at Rs 31,300 crore in the first six months as against Rs 35,000 crore last year.