Fund-raising from institutional investors seems to be gaining favour among listed companies as a large number of firms, including SBI, JSW Steel and Ashok Leyland, have lined up plans to raise over Rs. 55,000 crore through the route.
This comes on top of close to Rs. 13,000 crore having been already raised by various listed companies by issuance of shares to institutional investors so far in 2015.
Market analysts said a positive outlook for equities and availability of capital have opened this window for the companies to mop up fresh funds from institutional investors.
Since May, at least 30 firms have announced plans to raise a collective amount of Rs. 55,000 crore through Qualified Institutional Placements (QIPs) or Institutional Placement Programmes (IPPs) routes, according to an analysis of their proposed plans.
Most of the companies eyeing to mobilise fresh capital through this route are from the banking sector. Banks are raising funds in order to boost their capital adequacy for the Basel-III norms, among other reasons.
The companies that have lined up such plans include Videocon Industries, Union Bank of India, Yes Bank, Syndicate Bank, Canara Bank, Central Bank of India, Natco Pharma, Vijaya Bank, City Union Bank, IL&FS Engineering & Construction Company, Omaxe, Andhra Bank and United Bank of India.
The funds would be used for expansion plans, refinancing of debt and to meet working capital requirements.
Some of these companies have already received approval from their respective boards and shareholders for the fund-raising plans while others are in the process of securing the necessary clearances.
Individually, State Bank of India plans to garner up to Rs. 15,000 crore through QIP/IPP route while Yes Bank intends to raise Rs. 6,400 crore and Videocon and Central Bank of India aim to mop up Rs. 5,000 crore each.
JSW Steel is eyeing an amount of Rs. 4,000 crore, Union Bank of India is targeting to rake in Rs. 3,700 crore, and Ashok Leyland and Syndicate Bank plan to raise Rs. 2,000 crore each.