HindustanTimes Mon,29 Dec 2014

Indian companies use overseas funds to retire debt, clean accounts

Arnab Mitra, Hindustan Times  New Delhi, July 01, 2014
First Published: 23:51 IST(1/7/2014) | Last Updated: 23:55 IST(1/7/2014)

Several large domestic companies are taking advantage of the revival of international investor interest in India to raise cheap funds abroad with which they are retiring high cost debt on their books.

Experts said these large foreign inflows, coming after a period when foreign investors had turned tepid towards Indian companies, could be the first step towards a revival of the stalled investment cycle, which is considered the main reason for the stubborn economic slowdown in India.

Tata Steel, Reliance Communications, Bharti Airtel, GMR Group, Lanco and the Leela Group of Hotels have recently raised funds or are planning to do so in the near future. The favoured path: raise cheap loans abroad, sell non-core assets or place shares with large investors, including qualified institutional placements (QIPs).

“I see a huge revival of confidence in India following the election of Narendra Modi as prime minister. These investments could be the first step towards more foreign investors betting larger amounts on India,” said Hemendra Kothari, chairman, DSP Black Rock, adding that several large global investors, who have not yet entered India, are waiting to do so.

The Anil Ambani-promoted Reliance Communications last week raised over Rs. 6,100 crore, about three-fourth of it via QIPs to large investors in the US, UK, Singapore, Hong Kong and West Asia.

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