Record Rs 8,204 crore raised through public issues so far.
Even as options in the equity markets dry up, small investors may be spoilt for choice this year, with a line of public issues for debt. According to data from Prime Database, a New Delhi-based primary market tracker, at least 12 companies have announced plans to raise capital through public sale of bonds.
Of these, six companies alone have plans to raise up to Rs 16,000 crore. The others have not disclosed the size of their proposed issues. Companies with debt issues lined include realty companies such as DLF, Dewan Housing and Gujarat International Finance Tec-City, and non-bank finance companies such as Future Capital, Mahindra and Mahindra Financial, Muthoot Finance and Manappuram.
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The country’s largest lender, State Bank of India, also has plans to bring out a bond issue. Today, India Infoline Investment Services, a subsidiary of listed broker India Infoline, filed offer documents to raise up to Rs 750 crore through a public issue of non-convertible debentures.
Indian companies have already raised record debt through public offers in 2011. Seven issues so far have garnered Rs 8,204 crore. The previous highest annual money raising by Indian companies in a calendar year was Rs 6,714 crore, raised in 1996.
“Dependence on debt is greater, given the state of equity markets,” said Prithvi Haldea, CMD, Prime Database. With the Sensex remaining negative for the year, primary market activity has been muted, with no major company hitting the market. Though high interest rates are a put-off for companies, the choice is a difficult one.
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“The choice is whether you stop your expansion and growth plans or bear the higher interest rates,” Haldea said.
Companies such as Shriram Transport have chosen the latter option. Last month, Shriram proposed to raise Rs 500 crore with an over-allotment option of an equal amount. The issue offered 11.6 per cent interest and was oversubscribed on day one. Shriram officials have said they will continue to tap the public market based on funding needs. A second tranche of Rs 1,000 crore is on the cards, according to reports.
A number of debt issuances from state-owned firms under different categories will also be available for retail investors this year. The government has permitted select firms to raise money through issue of tax-free bonds, infrastructure bonds, etc.
Power Finance Corporation has said it would raise Rs 12,000 crore through infrastructure bonds and tax-free bonds. Indian Railway Finance Corporation has said Rs 8,000 crore will be raised through public issues. IDFC, L&T Finance and IL&FS are the other infra debt companies which will be looking at raising debt capital from the public.
In addition to the public markets, where issue of debt requires prior regulatory approvals and filings, companies raise thousands of crores through private placement of debt instruments every year. According to data from Prime Database, in 2010-11, mobilisation through corporate bonds on private placement was Rs 1.92 lakh crore. About two-thirds of this money was raised by government organisations, PSUs and public finance institutions. Another 129 issuers from the private sector raised Rs 60,039 crore.