India Inc loads upon privately placed debt like never before
India Inc is tapping the low-cost private placement route to raise funds like never before.
Fund mobilisation through corporate bonds that are privately placed has hit a record ₹8.97 lakh crore in 2023, with three weeks left in the year.
This surpasses the previous record of ₹7.95 lakh crore raised in 2020. Last year, India Inc raised ₹7.58 lakh crore through this route, according to primedatabase.com.
Fund managers attribute the unprecedented mobilisation to the heightened demand for credit driven by increased economic activity amid faster-than-expected growth, coupled with the low cost of funding.
«Private placement emerges as the most cost-efficient method for swiftly raising capital compared to other forms of fundraising such as IPOs (initial public offerings), QIPs (qualified institutional placements) or bank loans,» said Ajay Manglunia, MD and head, investment grade group, JM Financial. «It features price discovery through bidding, bidder confidentiality, and lower funding costs.»
Of the total, public sector banks and financial institutes accounted for Rs 3.15 lakh crore, private sector non-banking financial companies (NBFCs) raised Rs 2.21 lakh crore, and corporates raised Rs 2.06 lakh crore, shows data from primedatabase.com.
Additionally, private sector banks secured Rs 1.15 lakh crore, while public sector companies raised Rs 35,743 crore.
India's economy expanded 7.6% in the September quarter from a year earlier, exceeding expectations, as manufacturing posted strong growth and investments gathered pace. Manufacturing, which has a nearly 19% weight in the economy, posted a nine-quarter high growth of 13.9%.
«In the midst of increased economic activities and constrained liquidity in the banking system,
