Funds raised via ECBs decline 35% y-o-y in the first two months of FY25

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Funds raised via External commercial borrowings (ECBs) by India Inc in the first two months of FY25 declined about 35 per cent to $8.296 billion against $12.847 billion in the year-ago period. This slowdown was possibly due to Indian companies holding back on fundraising plans till clarity emerged on the general elections.

Now that the NDA has clinched power for the third time on the trot and economic policy continuity is assured, the companies are expected to step up funding via ECBs, say economists.

The companies that raised $200 million or more in May 2024 via ECBs under the “Automatic Route” include Ikea India ($574.38 million), Manappuram Finance($350 million), Pune Data Center Two($303 million), Adani Green Energy Twenty Five(two tranches of $150 million each), Pune Data Center($291 million), DC Development Hyderabad ($281 million) and Mahindra & Mahindra Financial Services ($200 million), per latest RBI data.

The companies that raised $100 million or more in May 2024 under the “Automatic Route” include Tata Motors Finance ($130 million), Lulu Convention and Exhibition Center ($120 million), Unidad Techno Labs ($108 million), Adani Renewable Energy Forty Five, Piramal Capital and Housing Finance and Bajaj Auto Credit($100 million each).

Approval Route

REC mopped up $300 million via ECB under the “Approval Route” in May 2024. ECBs are commercial loans raised by eligible resident entities from recognised non-resident entities. These borrowings have to conform to parameters such as minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc.

In April and May 2024, Indian companies raised $4.284 billion ($5.539 billion in April 2023) and $4.012 billion ($7.488 billion), respectively.

Fitch Ratings, in a recent report, said tightening domestic liquidity in India may encourage more non-bank financial institution (NBFI) issuers to venture offshore. “We expect Indian issuers to tap US dollar markets opportunistically when onshore-offshore rate differentials turn favourable,” the agency said.