Indian firms raise global capital


Another interesting offshoot of liberalization has been that taking advantage of the new provisions; Indian firms have started raising global capital. Global capital issues have becomes regular feature with Indian companies. More than 30 companies entered the global capital market as soon as the government allowed Euro issues-Euro convertible bonds (ECB) and global depository receipts (GDR). In the very first year, 1993-94, Indian companies raised global funds to the tune of $1.5 billion, mostly through Euro issues. In fact, that year as many as 115 companies were ready with their plans for Euro issues for a total amount of $10 billion. The government had to announce a cap of $2.5 billion for the year as a regulatory measure. The next year, 1994-95, Indian firms raised over $3.0 billion from the global capital market through GDRs. Indian firms were the largest overseas equity issuers among firms from emerging markets.

Coming to more recent times the years were marked by the success of information technology or IT companies. Indian corporate have firmed up plans to raise over $3.5 billion through overseas equity offerings. This is more than half the $6.79 billion raised by them since the fist global equity float in 1992.

Indian equity has been on a high after the success of Infosys and Satyam Infoway. Four players, State bank of India, Industrial Development Bank of India, Reliance Industries Ltd and Reliance Petroleum Ltd. planned to raise $500 million each and most of ot is done by now. Other big players like Mahanagar Telephone Nigam Ltd, Indian Oil Corporation, Satyam, Rediff, Wipro, NIIT and Bharati Net planned to chip in with offers of $ 100-200 million. There are many more IT and Net companies that are eyeing offering in the range of $25-100 million.

Indian firms join hands with global investment firms

Indian firms, which went global in raising capital, have also struck alliances with international investment and financial service firms to facilitate their Euro issues. The interesting point is that practically all the leading financial service firms and investment banks in the world were willing to align with Indian companies.

· Jardine Fleming, one of the largest merchant bankers and investment and brokerage houses in Asia, partnered in the GDR floated by Hindalco, Gujarat Ambuja Cements, Sterlite India, GE Shipping and Videocon International.

· Lazard Bros partnered in the issues of SCICI, Bombay Dyeing, ITC and SPIC

· Merrill Lynch, the well-known American investment banking firm and a world leader in cross country issue management, associated with the issues of UTI, Essar Gujarat, Grasim, ITC, Indal, and Videocon International.

· Kleinwort Benson backed the issues of Jindal Strips and Indian Rayon; James Capel partnered that of ICICI, Arvind Mills, ITC, Grasim, Reliance, Essar Gujarat, Gujarat Ambuja Cement, GE Shipping, SCICI, and SPIC.

· Lehman Bros, another well-known American investment bank, lined up with Reliance, Jindal Strips and Essar Gujarat;

· Smith New Court, the UK-based brokerage firm specializing in stock-broking and private global placement of shares and commercial debt, allied with Indo Gulf, Indian rayon, Mahindra and Mahinra and Indal.

· Morgan Stanley partnered Reliance and ICICI. Citi Corp supported Grasim and Telco.

· Asian Capital Partners, the Hong Kong-based firm with interest in Euro issue management, too found a place in the list of international firms partnering Indian companies.

Indian Capital Markets gradually get Global:

India’s capital market started getting integrated with international capital markets as a cumulative result of the various developments in the financial sector/capital markets as explained in the foregoing paragraphs,. The entry of foreign institutional investors and brokers into Indian stock markets coupled with the moves of Indian companies for raising capital globally and their partnerships with international investment banks and financial service firms contributed significantly to this process of Foreign Exchange availability and global firms’ presence in India and Indian companies setting up their units abroad.