India Inc tapping foreign funds for equity binge

By Narayanan Somasundaram and Tony Munroe

MUMBAI (Reuters) - Indian companies are riding a wave of overseas liquidity and raising billions of dollars in fresh equity, although fund managers and bankers say investors are getting picky, and not every deal will succeed.

Foreign funds, attracted by the domestic consumption-led rebound story in India, have been a crucial driver in the 89 percent rally in Indian stocks since an early March low, pouring roughly $8.7 billion (5.3 billion pounds) into the market over that period and powering an 8.1 percent appreciation in the rupee.

Overseas investors are the biggest buyers of new shares from India, where companies have raised more than $7.5 billion in equity so far this year, surpassing the full-year total for 2008, according to Thomson Reuters data. That is still far short of the record $32.4 billion they raised in 2007.

Dozens more Indian firms hope to come to market with equity sales over the next few months to fund growth and repay debt.

"The liquidity is very strong with investors," said Vedika Bhandarkar, head of India investment banking at JPMorgan, which has co-managed a combined $2.34 billion in overseas India share sales since late last week by Sterlite Industries (STRL.BO), Tata Steel (TISC.BO) and Tata Power (TTPW.BO).

Issuance in recent months has come almost entirely through follow-on offerings by listed companies, but numerous companies are dusting-off IPO plans, which take several months to develop, and Bhandarkar said she expects to see a spate of new listings across industries in October and November.

IPO hopefuls include Adani Power, which aims to raise $623 million. Power firm NHPC Ltd and Coal India Ltd, both of which are state-owned, could raise more than $1 billion between them.

For a list of companies with equity-raising plans, click