Indian Companies Collect Rs 9.41 Lakh Crore From Private Placement Of Corp Bonds In FY24

Indian companies garnered Rs 9.41 lakh crore through the issuance of bonds on a private placement basis in 2023-24, a surge of 10% from the preceding fiscal amid surge in credit demand.

The 2024-25 fiscal is expected to be very robust as companies will continue to raise capital for capex post-election results.

"In an unprecedented era of economic development aided by pro-business reforms and macroeconomic stability, India is set to become the third largest economy globally by 2027 and will continue to see strong flows."

"In this backdrop, we expect FY25 to also be a very strong year from a primary capital perspective as companies will continue to look to raise capital for capex post-election results," Neha Agarwal, Managing Director & Head of Equity Capital Markets at JM Financial Ltd, said.

According to data compiled by Prime Database, the amount raised through debt private placement in 2023-24 stood at Rs 9.41 lakh crore, up 10% from Rs 8.52 lakh crore in 2022-23. This was mobilised by 904 institutions and corporates.

In addition, there were 17 debt private placements from real estate investment trusts and infrastructure investment trusts collecting Rs 14,155 crore.

The funds were mopped up to strengthen balance sheets, retire existing debt and support working capital requirements.

In private placement of bonds, firms or trusts issue securities or bonds to institutional investors to raise capital.

Market experts believe private placement has become the preferred and cost-efficient route for fund mobilisation compared to other avenues such as initial public offering, qualified institutional placement and bank loans. The higher fund collection through the route could be due to an increase in credit demand, soaring bank loan rates, and expensive overseas borrowing.

The highest mobilisation through debt private placements was by NABARD (Rs 51,855 crore) followed by REC (Rs 48,976 crore) and HDFC (Rs 46,062 crore).

Apart from the private placement of corporate bonds, the public bonds market also saw a huge increase with 48 issues raising Rs 20,757 crore in comparison to 32 issues raising Rs 7,444 crore last year. The largest issue was from PFC raising Rs 2,824 crore.