Indian companies to raise $70 billion in equity sales in 3 years: Morgan Stanley

Companies in India are expected to raise around $70 billion through sales of equity shares over the next three years, Morgan Stanley India country head said today.

Speaking at the Reuters India Investment Summit in Mumbai, Narayan Ramachandran, India head of Morgan Stanley, said of this amount roughly $10-15 billion will come as stake sales in state-run enterprises.

In addition investment will also get a boost from the upcoming auction of third-generation (3G) mobile spectrum, which will bring in billions of dollars as fresh capital, he said.

Morgan Stanley's assessment comes in the backdrop of an increase in the notional value of investments in the domestic stock market through participatory notes (PNs), the off-shore derivatives issued by foreign institutional investors (FIIs), which rose from 15.5 per cent in August to 16.4 per cent and 16.5 per cent in September and October, respectively.

FIIs held equity assets in India worth $168.53 billion in September and $161.8 billion in October, according to data provided by the Securities and Exchange Board of India (Sebi). Of this, participatory notes accounted for $27.65 billion and $26.68 billion in September and October, respectively.

As of August-end, while FII investment in stocks stood at $152.24 billion, the share of PNs was $23.64 billion.

The increased inflow of foreign investment can be the direct effect of Sebi lifting the ban on PNs in late 2008 as poor market conditions and record outflows muted investments in the country.
 
Meanwhile, Indian companies have raised about $18 billion in equity thus far this year against $7.2 billion raised last year.