Rs 2,000,000,000,000! That's what India Inc mopped up

India Inc sated its thirst for funds like never before in 2010, with a record mop-up of over Rs 2,00,000 crore (Rs 2,000 billion) from the equity and debt market during the calendar year.

The capital raised by Indian companies in the 2010 calendar year was over one-third more than the Rs 1,50,000-crore (Rs 1,500-billion) mop-up in the previous year and was a beacon of hope in a global economy that has been witnessing turbulence on account of the poor health of Western economies.

Experts said Indian companies seem to have found a silver lining in the global financial crisis, as they managed to wrangle better terms for garnering the funds required for business expansion activities.

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They expect even more funds to be mopped up in the New Year. Indian firms raised a total of Rs 2,00,123 crore during 2010 through equity issues -- in the form of initial public offers, follow-on public offers, qualified institutional placement, rights issues and foreign depository receipts like global depository receipts -- as well as debt instruments like external commercial borrowings and foreign currency convertible bonds.

However, fund-raising from the international market, through FCCBs, American depository receipts and GDRs, was somewhat subdued in comparison to the previous year.

There was not a single ADR issue by Indian companies in 2010.
Analysts believe that the Indian economy -- which is expanding at a pace of almost 9 per cent -- with its ability to generate better returns, will attract an even higher amount of capital next year.

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"Indian investors will definitely mop-up more capital in 2011 from the level of 2010. They will prefer domestic routes for raising capital in 2011," SMC Global Securities Ltd Strategist and Research head Jagannadham Thunuguntla said, adding that the ECB route will be the instrument of choice for raising funds next year as well.

A total of 547 companies raised about $18 billion (Rs 81,400 crore) through ECBs in 2010, while they had garnered nearly Rs 75,000 crore ($15 billion) last year.

The biggest ECB issuances during 2010 were by companies such as Indian Oil Corporation, EXIM Bank and Reliance Industries.

The year 2010 also featured 70 public issues, that is, 62 IPOs and 8 FPOs.

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The funds raised through public issues totalled about Rs 71,114 crore (Rs 711.14 billion).

A major chunk of the amount raised through share sales -- that is, Rs 49,946 crore (Rs 499.46 billion) -- came from the government divesting its stake in public sector companies.

In the public offer segment, 2010 saw a clear revival in the Indian primary market after a lacklustre 2009, when only 20 companies raised close to Rs 20,000 crore (Rs 200 billion).

The largest public issue in 2010 was that of Coal India IPO, with the issue size exceeding Rs 15,000 crore (Rs 150 billion).

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Coal India's share sale offer also made history as the largest public issue of all time in the Indian capital market.

The grand success of Coal India's IPO was also seen in the Rs 9,967 crore (Rs 99.67 billion) follow-on offer of NMDC, NTPC's FPO (Rs 8,287 crore or Rs 82.87 billion) and Power Grid Corporation of India Ltd's FPO (Rs 7,442 crore or Rs 74.42 billion).

Notably, the response from all classes of investors was robust, given that most of the public offers were over-subscribed multiple times.

Public issues were seen across sectors such as power, minerals, infrastructure, banking, healthcare and realty, among others, indicating that investors' overall confidence in the primary market is on a high.

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Further, one more special highlight in the 2010 primary market were public issues from sunrise sectors such as microfinance, fitness centers, etc.

In particular, it was the ECB-push that took India Inc's fund-raising activities in 2010 to a new level despite capital-raising activities turning lukewarm on fronts like ADRs, GDRs and FCCBs.

About 53 companies raised about Rs 28,339 crore (Rs 283.39 billion) during the year 2010 through the sale of shares to qualified institutional investors, including overseas private equity firms and local and foreign financial services firms like banks, insurers and fund houses.

During the calendar year 2009, the funds raised through the QIP route amounted to about Rs 32,631 crore (Rs 326.31 billion).

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Adani Enterprises was the first company to set the trend for QIPs during the years, raising a total of Rs 4,000 crore (Rs 40 billion).

Its example was followed by Tata Motors (Rs 3,350 crore or Rs 33.5 billion) and IDFC (Rs 2,654 crore or Rs 26.54 billion).

The quantum of funds raised through rights issues -- where listed companies offer shares to existing shareholders -- jumped 135 per cent on a year-on-year basis to Rs 9,203 crore (Rs 92.03 billion) in 2010.

In comparison, Indian companies were able to raise just Rs 3,626 crore in the previous year.
While there were no ADR issues, some action was seen in the area of fund-raising through GDRs.

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During 2010, there were 33 GDR issuances, which raised Rs 3,968 crore ($879 million). This was almost 43 per cent lower than the funds raised through GDR issues in 2009.

"In an era where fund-raising in the Indian domestic markets through instruments such as IPOs, FPOs and QIPs has been quite strong and healthy, the foreign fund-raising through ADRs has almost become a thing of past," according to an analyst.

Another sour point in the fund-raising space was that of FCCBs. During the year, a total of about Rs 6,100 crore ($1.35 billion) was mopped up through 12 FCCB issues.

This was lower than the FCCB activity seen in the previous year, when 13 FCCB issues raised about $2.23 billion (Rs 10,000 crore).