Fund mop-up via preferential route tumbles 88% in Jan: Sebi

Funds garnered by companies through preferential allotments declined from Rs 6,943 crore in Dec to Rs 809 crore in Jan

Fund raising through issuing of shares to promoters and shareholders on preferential basis has plunged by 88% to Rs 809 crore in January due to volatile market conditions.

According to the latest data available with the market regulator Securities and Exchange Board of India (Sebi), funds garnered by companies through preferential allotments declined from Rs 6,943 crore in December to Rs 809 crore in January.

However, the number of preferential issues shored-up to 49 in January from 27 in the preceding month.

The cumulative amount mobilised is Rs 43,359 crore, through 351 preferential allotments, for the April-January period of current financial year (2013-14).

"There were 49 preferential allotments (Rs 809 crore) listed at BSE and NSE during January 2014 as compared to 27 preferential allotments (Rs 6,943 crore) in December 2013," Sebi noted.

Market participants said capital raised through the preferential allotments of shares has slowed due to volatile secondary market conditions. Besides, most of the issues were of smaller size.

The sharp fall in fund raising is coincided with about 3% plunge in the BSE's benchmark Sensex during the month.

In the 2012-13 fiscal, companies had mopped up around Rs 47,000 crore -- a sharp rise from Rs 25,709 crore garnered through preferential allotments in the earlier fiscal.

In 2010-11, companies had collected Rs 30,511 crore through this route.