20/12/2020 Indian cos mop up close to Rs 10 lakh cr in 2020 - The Economic Times

English Edition | 20 December, 2020, 06:16 PM IST | E-Paper

Indian cos mop up close to Rs 10 lakh cr in 2020

Synopsis
Debt route turned more attractive for many Indian corporates for multiple reasons, including that there won't be dilution of promoter
equity, according to experts.

ThinkStock Photos
New Delhi: Not-so-expensive credit avenues, benign capital markets and the scramble to
built a liquidity war chest to ght pandemic-induced nancial woes saw Indian companies
mopping up close to Rs 10 lakh crore through equity and debt in 2020. And the bullish
trajectory is expected to continue next year too.

With most of the developed markets awash with cheap credit, thanks to low interest regimes,
RELATED entities from emerging markets like India tapped the low cost funding options.
Day trading guide for
Monday
Debt route turned more attractive for many Indian corporates for multiple reasons,
FPIs invest Rs 54,980 cr in
Indian equities in Dec so far
including that there won't be dilution of promoter equity, according to experts.

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25,000 crore in next 3
months: DFS Secy
Govt may invite EoIs for
Shipping Corp sale this
week
"Lockdown and social distancing norms a ected a large number of projects. Further, a large
number of companies announced fresh capacity expansion and a number of infra projects
are likely to start in near term. Hence, fund mobilisation is expected to be higher in next
year," Arjun Yash Mahajan, Head of Institutional Business at Reliance Securities, said.

INSIGHTS
Read Stock Insights by ET for a quick analysis Out of the cumulative Rs 9.85 lakh crore garnered till December 15 this year, Rs 7.3
Happiest Minds Technologies Ltd.
341.4516.20 (4.98%) lakh crore was mopped up from the debt market, Rs 2.46 lakh crore came from the
Explore Now equity market and around Rs 7,100 crore through the overseas route, data
compiled by analytics major Prime Database showed.

Of the total Rs 7.3 lakh crore raised through Indian debt markets, Rs 7.23 lakh crore came from private placement and Rs
7,167 crore was through public issuances.

V Jayasankar, Senior ED and Head (ECM) at Kotak Mahindra Capital Company said a slew of factors such as faster
recovery of the economy, positive developments on the COVID-19 vaccine programme front, availability of ample
liquidity for emerging markets, including India, would prompt companies to take advantage of benign capital market
conditions to fund growth plans and deleverage their balance sheets in next year.

In 2019, rms raised Rs 10.6 lakh crore, including Rs 7.28 lakh crore through debt and Rs 3.3 lakh crore through equity.

Fresh capital has been garnered to fund growth as well as expansion plans, re nance high cost debt and create a war
chest of liquidity, while a large amount raised from Initial Public O ers (IPOs) also went to the promoters and
shareholders by way of sale of their respective holdings.

"Any borrowings done in the recent few months are more to do with re nancing high cost debt or creating a war chest of
liquidity for use as demand comes back to the table," Ajay Manglunia, Managing Director and Head of Institutional Fixed
Income at JM Financial, said.

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20/12/2020 Indian cos mop up close to Rs 10 lakh cr in 2020 - The Economic Times

Additionally, companies preferred debt route as it does not dilute the promoter shareholding, hence preserve their
interest, Nikhil Kamath, Co-Founder and CIO of True Beacon and Zerodha, said.

In the equity market, funds mostly came from issuance of shares to institutional investors and rights issue mode as
benign stock markets and better valuations made rms to opt for such routes.

Within the equity segment, Quali ed Institutional Placement (QIP) route helped raise Rs 79,086 crore, rights issue of
shares to existing shareholders accounted for Rs 64,984 crore, IPOs added Rs 26,472 crore, including for SMEs,
preferential issue of shares got Rs 39,484 crore and O er for Sale (OFS) through stock exchange mechanism contributed
Rs 21,256 crore. The share of FPO (Follow on Public O er) was at Rs 15,024 crore.

A total of 14 main-board IPOs mopped-up Rs 26,313 crore, and Small and Medium Enterprise (SME) IPOs brought in Rs
159 crore. In comparison, Rs 12,365 crore raked in through main-board IPOs, while Rs 624 crore via SME segment in 2019.

In addition, Yes Bank took the follow-on public o er (FPO) route to mop-up Rs 15,000 crore this year, while SME raised
Rs 24 crore through the route.

"A number of IPOs were already lined up before economy felt the jolt of pandemic and they had to defer due to lockdown.
As equity markets rebounded led by better prospects of earnings and huge scal stimulus o ered by the government,
IPOs started seeing investors' interests," Mahajan said.

Kamath said retail investors have shown a high degree of interest in IPOs and the trend is expected to continue in 2021
too.

The IPO chart in 2020 was led by SBI Cards and Payment Services Ltd that raised Rs 10,355 crore, followed by Gland
Pharma (about Rs 6,480 crore), CAMS (Rs 2,240 crore) and UTI Asset Management Company (Rs 2,160 crore).

Interestingly, this year saw most of the IPOs opening with a premium over the issue price suggesting strong investors
appetite. IPOs like Route Mobile, Happiest Minds Technologies NSE 4.98 % , Rossari Biotech and Gland Pharma
clocked handsome gains ranging from 40-200 per cent since listing to investors.

Moreover, IPO activity is expected to further accelerate in 2021 as investors are keen to invest in quality companies
across multiple sectors, Jayasankar said.

Apart from public issues, equity raise through QIPs and rights issues together hit a record level of Rs 1.5 lakh crore
supported by accessibility of abundant liquidity.

Fund collection through QIP mechanism more than doubled to Rs 79,086 crore this year from Rs 35,238 crore through the
mode in 2019.

Fund raising through QIP route in 2020 was majorly dominated by nancial institutions and banks. Among the major
QIPs issuance were ICICI Bank raising about Rs 15,000 crore, Bharti Airtel (over Rs 14,000 crore), HDFC (Rs 14,000 crore),
Axis Bank (Rs 10,000 crore) and Kotak Mahindra Bank (Rs 7,442 crore).

Jayasankar said raising of 'COVID capital' was seen across sectors.

Primary capital raised during last couple of quarters have been termed as "COVID capital" wherein equity that was raised
were used to strengthen the balance sheet to overcome any nancial stress due to COVID-19 and also to take advantage
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20/12/2020 Indian cos mop up close to Rs 10 lakh cr in 2020 - The Economic Times

of growth opportunities available.

Besides, rms mobilised Rs 64,984 crore through rights issue this year, which was higher than Rs 52,053 crore raised in
2019.

Reliance Industries contributed the lion's share, with its Rs 53,124 crore through rights issue. This was also the country's
largest-ever rights issue.

However, capital garnered through preferential issuance of equity shares plunged to Rs 39,484 crore in 2020 from Rs 2.04
lakh crore in the preceding year. Also, funds collection via OFS route -- used for dilution of promoters' holdings -- fell to
Rs 21,256 crore this year from Rs 26,000 crore in 2019.

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