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The ease with which India Inc is raising funds during the Covid-19 pandemic indicates that there is no shutdown when it comes to equity investments for 'quality' companies. Corporate India raised ₹1.26 lakh crore so far in the first half of the current fiscal. During the same period last year, India Inc had raised ₹39,000 crore.
While many attribute the buoyancy in the secondary market to Robinhood investors, who thrive on low or nil brokerage costs, the success in the primary market suggests it's not just retail investors but well-informed institutional investors and promoters are also willing to play their part.
The mode of fund-raising is predominantly rights and qualified institutional placement (QIP), while two IPOs (MindSpace REIT and Rossarri Biotech) and a further-on public offer (YES Bank) also received strong response. However, last year it was dominated by IPOs and rights issues, while just two companies (Godrej Properties and YES Bank) had opted for the QIP route.
What is heartening is that companies from diverse sectors -- Reliance to Mindspace REIT; private sector banks to retail companies; and pharma to core industries-- were successful in raising funds. Most of them were mega in size (in excess of ₹10,000 crore), while a small quantum of just ₹2 crore (through SME platforms) also attracted investments.
According to Pranav Haldea, Managing Director of Prime Database Group, 80 per cent of the total issue amount is from large corporates. "Bull or bear market, there will always be a strong demand for good quality companies such as Reliance, Kotak Mahindra, Axis and ICICI Bank," he said. As such, the fund raising is not broad-based, he added.
Among them, Reliance Industries was the biggest offer, whose ₹53,125-crore rights issue overwhelming response from all categoriesof investors. Though, technically Reliance raised just 25 per cent, i.e., about ₹13,280 crore, one can still count it as a full issue ₹53,125 crore, as many may not opt out of thie issue during the successive calls. An Allottee needs to another 25 per cent by May 2021 and the balance 50 per cent in December 2021.
Pvt banks take QIP route
Top private sector banks such as ICICI Bank, Axis Bank and Kotak Mahindra Bank preferred qualified institutional placement route, while the beleagured YES Bank raised ₹15,000 crore through a further public offering (FPO), which saw overwhelming response from institutional buyers.
Apart from Reliance, eight others raised ₹5,700 crore through rights issue. They include M&M Financial, Spencer’s Retail, Aditya Birla Fashion, PVR, Shriram Transport Finance and Gateway Distriparks.
Initial public offering remained lukewarm as just two companies – Rossari Biotech and Mindspace Business Parks REIT – hit the market. However, the response to these two companies from all categories of investors was large. While Rossari issue oversubscribed by 80 times, the ₹4,500-crore issue of Mindspace received bids for 13 times.
Haldea, however, cautioned, the current rally is liquidity-driven and the secondary market may come under pressure once the liquidity dries up.
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