Fund raising via preferential allotment hits 9-month low

Funds garnered by companies through preferential allotments declined to Rs 926 crore in Sept from Rs 1,062 crore in the preceding month: Sebi

Fund-raising by issuance of shares to promoters and shareholders on preferential basis has hit a nine-month low of Rs 926 crore in September amid 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 to Rs 926 crore in September from Rs 1,062 crore in the preceding month.

The September figure has reached the lowest level since January this year, when companies had mopped-up a total of Rs 879 crore via preferential allotments route.

Besides, the number of preferential issues dropped to 32 in September from 35 in the preceding month.

With the latest capital mop-up, the cumulative mobilised amount through preferential allotment route stood at Rs 31,486 crore through 220 issuance in the first six-months (April-September) of the financial year 2013-14.

"There were 32 preferential allotments (Rs 926 crore) listed at BSE and NSE during September 2013 as compared to 35 preferential allotments (Rs 1,062 crore) in August 2013," Sebi noted.

Market participants said capital raised through the preferential allotments of shares have slowed due to tough secondary market conditions.

In the entire financial year 2012-13, companies garnered around Rs 47,000 crore, marking a sharp rise from Rs 25,709 crore garnered through preferential allotments to the promoters as well as shareholders in the earlier fiscal.

In 2010-11, companies had collected Rs 30,511 crore through preferential allotments.