Fund raising via institutional investors jumps 4-fold

Fund raising by Indian companies through issue of shares to institutional investors jumped over four-fold to Rs 5,401 crore in the first half of the current financial year.

According to a report by Prime Database, companies mopped-up a total of Rs 5,401 crore via institutional investors during the six-months ended September 30, compared to Rs 1,243 crore raked in the year-ago period.

Of the total funds raised, Rs 4,180 crore was garnered through Institutional Placement Programme (IPP) and the remaining Rs 1,222 crore through Qualified Institutional Placements (QIPs).

The increase in funds raised through the IPP route was mainly due to 10 companies opting the route to comply with Securities and Exchange Board of India's (Sebi) minimum public shareholding norms, the report said.

The largest IPP was that of realty major DLF for Rs 1,863 crore while the largest QIP was from ING Vysya Bank which fetched Rs 881 crore, it added.

Besides, Neyveli Lignite (Rs 358 crore) and State Bank of Mysore (Rs 66 crore) also chose the IPP method to reduce promoters' shareholding.

"The huge drop in amounts raised from QIPs in the last three years - from the highs of 2009-10 and 2010-11 - can be attributed to sluggish or volatile market conditions," the report said. "However, one may see an improvement in the QIP market in the coming months due to increased fund raising from banks to raise additional capital through this route."

Prime Database is a leading database on the country's capital markets.