Hong Kong: India has joined China and Australia in loosening rules around capital raising to help companies tap funds amid the economic disruptions caused by the coronavirus pandemic.
The market regulator unveiled rules to fast-track rights issues on Tuesday. China and Australia have already made regulatory changes to favor capital-raising, leading to a surge in issuance in both countries.
Indian firms are likely to need the cash. The coronavirus pandemic is set to deal a blow to an economy that was expanding at the slowest pace in a decade even before the outbreak. The International Monetary Fund has slashed its growth projection for India to 1.9% for the financial year 2021 from 5.8% estimated in January. Even that looks optimistic compared with what private economists are forecasting, with some having penciled in the first contraction since 1980.
Additional share sales have been slow. Such offerings in the country have raised $3.91 billion year to date, down 9% from a year earlier. The proceeds for January — before the coronavirus had spread globally and rattled markets — totaled $2.23 billion before dropping to just $299 million in March and less than $100 million in April with a single deal from Metropolis Healthcare Ltd., Bloomberg-compiled data show.
But on Wednesday Kotak Mahindra Bank Ltd. announced a plan to issue as many as 65 million shares to strengthen its capital buffers in a deal that could be worth about $1 billion, as Indian banks brace for a surge in defaults due to the lockdown intended to contain the coronavirus.
Meanwhile Australian firms and their shareholders have raised $6.2 billion in follow-on share sales this year, up 116% from a year earlier. In China 32 companies announced additional offerings in March, the most since September 2016, after the securities regulator allowed firms to provide bigger discounts to lure investors. – Bloomberg