Rights issues back in demand as India Inc on fund raising spree amid Covid crisis


By Sanjeev Sharma

New Delhi, Jul 9 (IANS): India Inc is beefing up its war chest as business uncertainty looms large with the lockdown, and more fund raising and rights issues are back in flavor.

India Inc is on a fund raising spree in times of uncertainty. Since the nationwide lockdown on March 25 to beginning of June, fund raising is up by 40 per cent.

Samir Sheth, Partner & Head, Deal Advisory Services, BDO India told IANS that India Inc has raised Rs 1.04 trillion from capital markets in the first six months.

"While the huge fund raise has been dominated by RIL (rights issue of Rs 53,124 crore and subsequent fund raises with leading strategic/ PE investors amounting to $ 15.2 billion), there are several other large Indian corporates such as Piramal Enterprises (Rs 3,631 crore), GSK stake sale in HUL (Rs 25,480 crore), Bharti Telecom (sold 2.75 per cent stake in Airtel, raises Rs 8,433 crore), Kotak Mahindra Bank (Rs 7,400 crore QIP and Uday Kotak's Rs 6,900 crore share sale) etc. who have managed to raise capital during these uncertain times," Sheth said.

The fund raising has gained traction after the lockdown.

Sheth said that between March 25, 2020 (when the nationwide lockdown began) and June 3, 2020, the overall fundraising rose by nearly 40 per cent year-on-year from Rs 70,575 crore to Rs 97,834 crore, as per Prime Database.

As per market news, several banks such as Yes Bank, Axis Bank, IndusInd Bank and IDFC Capital First are contemplating fundraising.

Sheth said rights offers may once again vault to the centre stage of corporate financing after the overwhelming response to Reliance Industries Rs 53,124 crore issue, making it the most preferred fundraising route for Indian companies in the aftermath of the COVID-19 crisis.

"In the past week, half a dozen entities including Tata Power, Mahindra & Mahindra Finance, PVR, Aditya Birla Fashion, Future Consumer, Lemon Tree Hotels and Shriram Transport have either announced or are planning to raise up to Rs 10,000 crore through rights issuances in FY20", Sheth said.

In the unlisted space, other than Jio, Postman, Byjus, BigBasket, Vedantu, Nykaa, DailyHunt, NoBroker have been able to raise funds of significant size, he added.

Every company would like to do a fund raise and keep their war chest ready for such uncertain times and capture growth when the economy returns to normalcy. There are uncertainties around which business models will thrive, which will survive and will take their last breath due to the economic after-effects of this pandemic", Sheth said.

Forward-thinking companies will raise funds well ahead of time to strengthen their balance sheet, raise acquisition capital, deleverage and also meet regulatory capital requirements. In a tough environment like this, capital is more likely to gravitate towards well-governed market leaders in the respective sectors, he added.

  

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