India Inc raises over Rs 150,000cr in 2009

India Inc raises over Rs 150,000cr in 2009
Times of India, December 22, 2009, Page 24

New Delhi: Companies knocking on government doors for bailout funds may have been the norm in the West, but India Inc begged to differ from this rule by raising over Rs 1,50,000 crore of capital for expansion from investors across the world in 2009. Nearly two-thirds of these funds are estimated to have come from investors in overseas markets, which themselves were in shambles and where companies were in dire need of capital, forcing them to beg their respective governments for money.

Also, Indian companies took the quickfire QIPs to meet their immediate capital needs, instead of the time consuming IPO route. As a result, the funds raised by Indian companies during 2009 were more or less equal to the levels seen in 2008, when economic downturn was not a reality for most part of the year.

A total of about 50 companies raised a record-breaking cumulative figure of about Rs 55,000 crore through sale of shares to qualified institutional investors, mostly overseas private equity firms and also local and foreign financial services firms like banks, insurers and fund houses.

According to global consultancy firm Grant Thornton, private PE and QIP space saw 221 deals till December 13, totalling $11.17 billion (about Rs 52,000 crore). “The worst seems to be over for PE investing and clearly there is renewed PE interest in investing in the country, specifically in sectors supporting India’s domestic consumption like education, healthcare and real estate. As a result PE activity in 2010 is expected to rise significantly,” said S Krishna, executive director, PwC.

E&Y’s partner and national director Pankaj Dhandaria said: “PE investment activity is on the rise again as is evident from the deal activity, which has picked up in the past couple of months.” Dhandaria added that India, which is on a growth trajectory and with its ability to generate relatively superior returns, would attract even higher degree of capital (including PE) in the years to come.

It was realty major Unitech which kicked off the QIP bandwagon earlier in the year and raised a total of close to Rs 4,500 crore in two separate deals. Other major QIP deals of the year included a consortium of foreign players putting in close to Rs 3,000 crore in Indiabulls Real Estate. Similar amounts were raised by Axis Bank and Hindalco, while a number of smaller fund-raising deals were also striked successfully.

The QIP performance of 2009 was even better that a total of little over Rs 20,000 crore — a record at that time — raised through this route during 2007, when markets and economy, both in India and abroad, were flying high. The QIP funds raised were not even Rs 2,000 crore in 2008. It was the QIP-push that took India Inc’s fund raising spree in 2009 to the overall levels seen in the previous year, as capital raising activities turned tepid in 2009. PTI.