MUMBAI:
As the marathon general elections draw to a close, India Inc is firming up strategies to raise fresh capital. The optimism surrounding the election outcome, capital expenditure (capex), and favourable valuations are key drivers behind listed firms’ plans to issue new papers.
Adani Enterprises, the flagship firm of the Adani group, on Wednesday, had received board approval to raise Rs 16,000 crore in equity capital. A day earlier, power transmission company Adani Energy Solutions announced its plan to raise Rs 12,500 crore.
In addition, drug major Torrent Pharma, solar power generation firm KPI Green, and Cello World — which operates in the consumer ware, writing instrument and moulded furniture segments — are targeting fund raises between Rs 750 crore and Rs 5,000 crore.
The preferred method for these companies to raise equity funds is through qualified institutional placements (QIPs), where a company can allot new shares to a group of investors at a price close to their current market rate.
Power company JSW Energy, IT services firm Coforge, and broker Angel One have already successfully concluded their large-scale QIPs in the past month. Most of these companies will use the proceeds to expand their operations and venture into new business areas.
Investment bankers indicate that more companies are seeking board approvals to raise fresh capital to capitalise on the buoyant market conditions. In the past, companies usually refrained from launching any share sales ahead of the Lok Sabha elections. However, optimism around the election outcome has led to a departure from this trend.
“Generally, market participants are positive about the market outlook. The QIP issuance is expected to be buoyant, thanks to the continuity in policy and supportive markets,” said Chirag Negandhi, managing director, of JM Financial. QIPs are getting bunched up now as companies were waiting for the post-result cool-off period to end, he added.
According to Sebi rules, companies are not allowed to conduct investor meetings ahead of the declaration of their quarterly financial statements. With the March 2024 and financial year 2023-24 result season-ending, companies have a few weeks’ window to launch share sales, said industry players.
