Indian companies raised a record Rs 4.76 lakh crore in 2015 through private placement of corporate bonds to meet business needs amid weakness in the equity markets.
In debt private placements, firms issue securities or bonds to institutional investors to raise capital.
Companies mobilised a total of Rs 4.76 lakh crore via private placement of corporate bonds last year as compared to previous high of Rs 3.43 lakh crore garnered in the preceding year, as per data available with capital markets regulator Sebi.
This was the highest money raised by firms through this route in a year since 2007. Data prior to that period is not available at Sebi’s website.
By way of numbers, 2015 witnessed 2,953 companies using the route as compared to 2,480 firms in the preceding year.
The funds have been raised mainly for expansion of business plans, to repay debt and to support working capital requirements.
In 2013, firms had raked in Rs 2.99 lakh crore via debt placement route, Rs 3.36 lakh crore in 2012, Rs 2.43 lakh crore in 2011 and Rs 2.37 lakh crore in 2010, along the similar route.
According to market analysts, companies raised fresh capital from such route to take advantage of the interest rate differential between bank loans and corporate bonds.
Besides, firms flocked towards debt route instead of raising capital through equity due to huge volatility.
The BSE’s benchmark Sensex fell five per cent in 2015 compared to a surge of 25 per cent in the preceding year.