50% drop in fund raising via QIP

Mumbai: Apart from public issues, equity fund-raising through qualified institutional placement (QIP) route dropped to Rs41,894 crore in 2021, a 50.4 per cent decline from Rs84,509 crore in 2020, primarily on account of availability of cheaper debt and expectation of high valuations due to rising markets making promoters hesitant to dilute. Another reason for the decline in QIPs fund-raising could be expectations of a further rise in stock markets as the markets were constantly rising from the beginning of the year till mid-November. The number of QIPs in 2021 has been higher than the last year, but the quantum has been relatively lower.

Going forward, First Water Capital Fund's Kriplani said that the fund collection through QIPs may pick up as the capex cycle is now reviving and valuations are rich. Funds mobilised through the rights issue mode also plunged to Rs 27,771 crore in 2021 from Rs 64,984 crore last year. Bharati Airtel contributed a major chunk with its Rs 21,000 crore rights issue this year. The year 2020 had seen the largest ever rights issue of Reliance to the tune of Rs 53,000 crore, making this year look pale in comparison. However, funds collected via the OFS route -- used for dilution of promoters' holdings -- rose to Rs 22,912 crore this year, from Rs 20,901 crore in 2020. In addition, firms took infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) mode for raising funds and raked in Rs 32,125 crore in the year passing by, lower than Rs 38,109 crore mobilized in 2020. Apart from the domestic route, funds totalling Rs 1.06 lakh crore have been raised through overseas bond markets and foreign currency convertible bonds (FCCBs), much lower than close to Rs 68,000 crore collected last year. Going ahead, experts believe that a robust funding scenario for Indian firms will continue into 2022 for the equity as well as debt routes. "Considering the strong liquidity, Covid situation being under control, positive corporate earnings outlook and overall India growth story. We expect investors to continue to look at funding Indian firms," Shah of Edelweiss Financial Services said. According to BDO India's Sheth, barring any large economic impact of Omicron, overall economic growth and significant funding scenario for Indian firms will continue into 2022. With regards to debt, IIFL Securities' Bhardwaj believes significant fund-raising through debt is likely to happen in the next few quarters as the economy is back on track and private capex plans picking up.