Tue. Sep 22nd, 2020

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Equity fundraising may soar to a record despite the pandemic

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India’s equity capital market is buzzing with fundraising activity, setting 2020 on course to become the best year on record for share sales. Easy liquidity and an uncertain future have prompted many companies to stock up on cash now rather than later, even as the larger economy creaks under the weight of the coronavirus pandemic.

This week alone, four companies launched share sales totalling over 26,000 crore, including mortgage lender HDFC Ltd and Axis Bank Ltd, which raised 14,000 crore and 10,000 crore, respectively. Apart from this, Indian companies have raised 1.32 trillion this year through fundraising routes such as initial public offerings, qualified institutional placements, follow-on public offers and rights issues, data from primary market tracker Prime Database shows. The previous record was set in 2017 when firms raised 1.66 trillion via equity capital market instruments.

With companies such as ICICI Bank Ltd, UTI Asset Management and Phoenix Mills Ltd collectively planning share sales of 18,000-19,000 crore and several others waiting in the wings, the final count is expected to be higher.

Foreign investors, flush with liquidity unleashed by global central banks, have shown strong interest in lapping up equities in emerging markets. In July, FIIs were net buyers of Indian equities worth $1.15 billion.

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