Companies to Raise Rs 60,000 Crore via Stake Sale this Year: Crisil

Rating agency Crisil expects companies to raise at least Rs 60,000 crore through stake sale in the current fiscal, prompted by buoyant market condition.

"Expected policy reforms and a buoyant capital market should lead to more transactions. Based on interactions, we expect companies to raise another Rs 600 billion at the very least in 2014-15," Crisis said in a report.

In the past 18 months, it said, 21 companies have announced 36 deals to divest assets and sell equity to strategic partners to raise Rs 80,000 crore which is nearly a fifth of their debt.

These asset sales by domestic companies will support their credit profiles, it said.

Over the past three years, it said, the total debt of these 21 companies increased by nearly 50 per cent to Rs 4.4 lakh crore as on March 31, 2014.

However, a slowing economy and rising interest rates meant operating profit stagnated at just 2 per cent during the period, it said.

Consequently, it said, asset sales became necessary to cushion the pressure on balance sheets. Companies have also reworked long-term strategies by exiting non-core businesses and divesting overseas assets.

The analysis shows nearly 60 per cent of the total divestment of assets was by companies operating in the infrastructure sector such as power, roads and oil & gas.

Further, a good 60 per cent of the transaction value also related to non-core sectors as well as overseas assets acquired during the economic upturn in a bid to diversify geographically.