Cos mop-up Rs 19k cr via preferential allotment in H1 FY15

Indian companies have raised close to Rs 19,000 crore from the issuance of shares to promoters and shareholders on preferential basis in the first half of the current fiscal to meet working capital requirements.

As per data compiled by capital market regulator Sebi, companies have raked in a total of Rs 18,818 crore in the first six months of the year, much lower than Rs 46,463 crore garnered in the entire 2013-14 fiscal. During April-September period of 2014, funds were garnered through as many as 254 issuances as compared to 411 in the entire last fiscal.

According to industry estimates, the total funds raised this financial year could be more than Rs 20,000 crore. Firms tap the preferential route through issue of equity shares, fully or partly convertible debentures or other financial instruments like share warrants which would be converted into or exchanged with equity shares at a later date.

The allotment is done to a select group of investors (promoters and non-promoters) on private placement basis. Market experts said that fund raising via preferential allotment has been less compared to the preceding financial year as companies have preferred QIP route and rights issue for garnering money.

Moreover, many companies are looking to tap the IPO route for fund raising as investor confidence has returned in the equity markets since the election verdict was announced inMay, they added. Most of the funds were raised to support working capital requirements. Interestingly, most of the funds were raked in through preferential route in May.

The fund raising was in line with the BSE's benchmark Sensex gaining around 19 percent during the period under review.