Most of the companies, which were earlier thinking of FCCBs, are now looking towards the global depository receipt route.
" FCCBs have become less attractive with the hardening of interest rates in the international market," Hugh Sandeman, head of business development for India, London Stock Exchange said.
FCCBs offer a fixed interest rate and a premium when the bonds are converted into equity at the maturity period. As interest rates have gone up, the premium offered on FCCBs has come down. This makes them less attractive for corporates, Sandeman said.
GDRs are becoming more attractive as LSE has decided to relax norms and allow Indian companies to list their shares on a separate market segment from July, which will exempt firms from disclosing their income as per stringent global accounting norms.
The new market segment will allow Indian companies to disclose their incomes as per Indian Generally Accepted Accounting Principles.
Some of the companies which are planning to raise funds from overseas market include Bharat Forge ($100 million), Nicholas Piramal ($75 million), Royal Airways (($90 million) and NIIT (($10 million).
Both Bharat Forge and Nicholas Piramal have kept the GDR option open. Indian Overseas Bank also plans to come up with a GDR float to be listed on Singapore bourse.
In the recent months, at least three entities have tapped the GDR market -- UTI Bank and Srei Infrastructure listed their GDRs at LSE while Centurion Bank opted for Luxembourg.
Other companies which had issued GDRs earlier are SBI, MTNL, SAIL, GAIL, Bajaj Auto, Ashok Leyland, Tata Tea, Indian Hotels, East India Hotels, HFCL, SSI Technologies, Aptech, Reliance Energy (formerly BSES), CESC, SIEL, J K Corp, Crompton Greaves, EID Parry and Raymonds.
There was a lull for over two years when no company chose the GDR route. India Inc had preferred the FCCB route two years ago when the Fed rates were low. Taking advantage of this, 11 corporates raised close to $1.5 billion.
The biggest issue was that of Tata Motors ($400 million) followed by Sun Pharma ($350 million), Tata Power ($200 million), Tata Tele ($150 million), Bharti ($115 million), Zee and Ashok Leyland ($100 million each) and Orchid Chemicals ($75 million).
During the last 12 months, about 10 companies raised close to $600 million in FCCBs. Some of the big issues include Tata Chemicals ($150 million), Wockhardt ($100 million), Sterling Biotech ($90 million), Jubilant Organsys ($75 million), Welspun ($60 million) and Strides Acrolab ($40 million).
© 2025