India Inc raised a whopping Rs38,645 crore in November through private placement of corporate debt bonds, a surge of 57 per cent from the year-ago level, for business expansion and propping up working capital requirements.
With the latest mobilisation, the total fund raising through private placement of debt securities reached Rs4.2 lakh crore in the current financial year (April-November). In the previous fiscal (2015-16), he capital raked in through the route stood at Rs4.58 lakh crore.
According to the data available with Securities and Exchange Board of India (Sebi), companies garnered a total of Rs38,645 crore from debt on a private placement basis last onth, much higher than the Rs24,618 crore raised in November 2015. In terms of numbers, 221 issues were made in November 2016 as compared to 133 in the year-ago period.
“Volatile and weak sentiments in equity markets encouraged companies to raise capital through private and public bond issues instead of equity issues. Also, cost of raising debt was lower in 2016 as interest rates fell.
“At the same time, there were various regulatory initiatives for deepening Indian Bond markets such as banks being allowed to issue Additional Tier 1 Bonds, to meet their capital requirement, investment limit for Foreign Portfolio Investors being increased and the withholding tax rate being reduced from 20 per cent to 5 per cent,” Bajaj Capital Senior VP and Head Investment Analytics, Alok Agarwala said.
The funds have been raised for business expansion plans, support working capital requirements and repayment of debt. In debt private placement, firms issue debt securities or bonds to institutional investors to raise capital.