Fundraising through private placement of corporate bonds by listed companies has hit a nearly six-year low 5.88 lakh crore for the financial year FY22. There was also a decline in the number of issuances in the financial year under review. The demand for these bonds witnessed a slowdown due to good growth in equities and aggressive fund distribution by banks at low interest rates.
Data from markets regulator SEBI shows that in FY22, there were a total of 1,405 issues on the BSE and NSE where listed companies had upheld. 5,88,036.94 crore through private placement of corporate bondLowest since the financial year 2015-2016.
In FY21, fundraising by companies listed on corporate bonds was at the highest level with 1,995 issues 7,71,839.98 crores.
This instrument stood on fundraising 6,74,702.88 crore in FY20, while it was 6,10,317.61 crore in FY19. was on fundraising 5,99,147.08 crore and 6,40,715.51 crore in FY18 and FY17 respectively.
The level of fundraising in corporate bonds through private placements was 4,58,073.48 crore in the financial year 2016. However, during this financial year 2,975 was issued on BSE and NSE.
Kamlesh Shah, MD, Share India Securities, told PTI that lower fundraising through the private placement route in FY22 as compared to the previous fiscal can be attributed to the good performance of equities in the stock market last year.
Ricky Kriplani, Principal Sponsor, First Water Capital Fund (AIF), said, “There should be some growth in debt raising through bonds during FY23 as Corporate India presses the pedal in the next major phase of the capex cycle. Simultaneously, With a potentially rising interest rate scenario, the issuance of these bonds should garner good interest from risk-taking investors,” the said news agency reported.
Presently, a Company Law Committee (CLC) has been constituted by the Ministry of Corporate Affairs (MCA) to look into the changes aimed at promoting greater ease of doing business in the country and promoting efficient implementation of the Companies Act, 2013. on to make recommendations. The Limited Liability Partnership Act, 2008 and the rules made thereunder.
Anand Lakra, Partner, J Sagar Associates (JSA) on the Summary Report of the Company Law Committee (2022) said, “The recommendations provide procedural flexibility to companies which will result in wider participation of shareholders and will be cost and time effective. It is envisaged to allow holding of shareholder meetings in electronic/hybrid mode, removing affidavits and replacing them with self-declarations, maintaining registers in electronic form and serving documents to shareholders in electronic form, etc. Such recommendations will facilitate ease of doing business in India and bring in best practices from more developed markets.”
“Currently, issuance or trading of fractional shares is not permitted. Given the recent increase in retail shareholder participation in the public markets, this is an excellent recommendation as it will enable retail shareholders to trade in shares that are no longer available. Since the Companies Act did not explicitly regulate RSUs and SARs, this created uncertainty about their ability to issue such instruments. RSUs, as an employee benefit tool, in Western markets is prevalent and SAR has been in existence for a long time for publicly traded companies in India under relevant SEBI regulations,” said Anand Lakra.