In 8 mths, fin cos raise just Rs 3,710 cr from shares issues
New Delhi: Raising of funds through public and rights issue of shares by the financial sector has fallen sharply to Rs 3,170 crore in the first eight months of the current fiscal, from Rs 12,500 crore in the year-ago period.
Banks raised Rs 1,617 crore through public and rights issue, while other financial institutions mopped up Rs 1,553 crore through these routes, as per market regulator Sebi's latest monthly bulletin.
In the same period of 2011-12, the banking and other financial sector companies had collectively raised Rs 12,490 crore, while the figure was Rs 7,107 crore in 2010-11.
The decline in the size of funds raised by financial sector companies is much sharper than about 41 percent fall in the total capital raised by companies across the sectors to Rs 9,663 crore between April-November 2012, Sebi data shows.
Experts blame the declining fund-raising trend to a weak market performance in last few years that has shaken the confidence of the retail investors in the country and made it hard for the industry to raise capital.
"When market fell, retail investors lost all interest and confidence in markets. As long as markets don't sustain themselves, investor confidence will not rebuild (and) we are going to see this trend," Religare Securities EVP and Head Retail Research Rajesh Jain said.
CNI Research CMD Kishor Ostwal said it is generally difficult for banks to raise capital through FPOs.
However, as per the Sebi data, industries such as healthcare as well as Pulp and Paper were able to raise substantially more capital in the current fiscal compared to the year-ago period.
Paper and Pulp firms together raised Rs 442 crore till November in this fiscal, as compared to Rs 306 in 2011-12.
Healthcare industry mopped up Rs 210 crore as compared to Rs 65 crore in the previous fiscal.
"These are concrete units. However, sectors like finance do not have tangible assets...And so the investors are not confident in investing here," Jain said.
Besides, Ostwal said that FII investments in healthcare segment have helped the sector to raise capital.