Indian companies are attracting strong interest from foreign investors, leading to a significant rise in the stock market and helping recover investor losses. During the recently concluded financial year 2024-25, Indian companies raised nearly ₹58,000 crore from foreign capital markets. This increase was driven by high-yield securities and strong demand from global investors despite hedging costs.
28.5% Increase in Fundraising Compared to Last Year
According to Prime Database:
- In the financial year 2024-25, Indian companies raised ₹57,815 crore from foreign markets.
- This is 28.5% higher compared to ₹15,592 crore raised in financial year 2023-24.
Why Are Indian Companies Turning to Foreign Markets?
According to Venkatakrishnan Srinivasan, Founder and Managing Partner of Rockfort Fincap LLP:
- Strategic and regulatory changes, diversification, and improving global liquidity have encouraged Indian issuers to return to offshore bond markets.
- Companies with AAA ratings in renewable energy and public sector enterprises are actively using offshore bond markets for long-term financing.
- On the other hand, the domestic market is facing liquidity challenges.
Top Issuers in FY 2024-25
- The biggest issuer in financial year 2024-25 was EXIM Bank, which raised ₹8,643.68 crore.
- Other major issuers included SBI and Shriram Finance.
Regulatory Changes Boost Offshore Bond Markets
In November 2023, the Reserve Bank of India (RBI) made a regulatory change that increased the risk weight on loans to NBFCs (Non-Banking Financial Companies).
- This move pushed shadow banks to diversify their financing sources beyond traditional bank loans.
- As a result, NBFCs were encouraged to explore alternative financing options such as foreign bonds and the domestic bond market.
- The regulatory step motivated NBFCs to seek funds from offshore markets and alternative financing routes.
Conclusion
The increasing confidence of foreign investors in Indian companies reflects positive market sentiment. The regulatory changes and global liquidity have made the offshore bond market an attractive option for Indian firms seeking long-term financing. This trend is likely to continue, contributing to India’s economic growth and financial stability.
