Corporate India's offshore fund mopping activity last year declined by 46 per cent to $19.41 billion as foreign investors were revising their investment strategies on the back of global credit crunch.
In 2007, Indian corporates had mobilised total funds from abroad worth $35.96 billion through Asset Depository Receipts (ADRs), Global Depository Receipts (GDRs), External Commercial Borrowings (ECBs) and Foreign Currency Convertible Bonds (FCCBs), as per the data compiled by the brokerage arm of SMC, Global NexGen Capital.
"Foreign investors are revisiting their investment strategy as to whether they would invest in Indian companies, which are facing pressure because of global slowdown," NexGen capital Equity head Jagannadhan Thunuguntla said.
Reduced fund raising is already reflecting signs of slowdown in capacity expansion and industrial production by Indian corporates, as the fuel for growth engine has dried up, according to NexGen.
According to the report, funds raised through ADRs and GDRs by Indian companies, have fallen by 96.21 per cent to $0.10 billion in 2008 from $2.64 billion in 2007. Besides, the number of number of ADRs and GDRs being listed on the overseas bourses also fell to four in 2008 from 15 in 2007.
"Foreign funds are facing redemption pressure at home, hence they are weighing the sustainability of the Indian corporates," Thunuguntla added.
The decline in investment signifies that once high- profile ADRs and GDRs went out-of-favour in 2008, it added.
