Firms' fund rush peaked in 2005

Companies raised Rs 1,61,725 cr through equity & debt.

Indian Inc's appetite for funds zoomed in 2005 as investment activity flourished in a booming economy. Companies raised a total of Rs 1,61,725 crore through equity and debt in domestic as well as overseas markets, nearly 57 per cent more than Rs 1,03,186 crore raised in 2004.

Corporates' dependence on overseas markets increased several fold in 2005 with nearly half of the funds being raised from abroad. Rs 80,045 crore was raised through overseas equity, bonds, convertibles and loans, over 116 per cent more than Rs 36,964 crore raised in 2004.

While, the funds raised from the domestic market was Rs 81,680 crore, over 23 per cent more than Rs 66,222 crore in 2004. 
 

INCREASING APPETITE
Overseas Equity+Debt
(In Rs crore)	2004	2005	% change
Depository receipts	471	18,370	3800.00
Bonds/FCCBs	17,463	23,500	34.57
Overseas loans	19,030	38,175	100.60
Total	36,964	80,045	116.54
Domestic IPOs+debt
IPOs	12,323	9,704	-21.25
Domestic debt	36,437	54,800	50.39

Overseas equity offerings shot up sharply with a total of Rs 18,370 crore raised from depository receipt issues in 2005 against just Rs 471 crore in 2004. Overseas syndicated loans went up by 100 per cent at Rs 38,175 crore against Rs 19,030 crore in 2004.

Of the 69 overseas bond issues, 61 were foreign convertible bond issues (FCCBs). India bucked the FCCB trend in Asia, including Japan, where the actual FCCB issuances declined in 2005. The number of FCCB issues from India almost tripled from 22 issues in 2004.

India's FCCB market size grew by 71 per cent to nearly $4 billion from $2.4 billion in 2004, raising India's share in the Asian convertible bond market to 27.4 per cent from 6.9 per cent in 2004.

"Foreign appetite for Indian assets is very strong, and it is not just the country's broad growth story," said Singapore-based Raju Shukla, managing director and head of investment banking and debt capital market, Southeast Asia, Barclays Capital.

"Foreign investors see value in Indian companies, which are becoming increasingly competitive globally due to several reasons including relatively low production cost, high level of skills and growing domestic & international market. Several FCCB issuers, brought to the market by Barclays Capital, were mid-sized companies, which had never tapped the overseas market," Shukla pointed out.