Foreign investor interest in Indian firms is rising, as evidenced by three Indian companies raising over $2 billion in the past two weeks through depository receipts. Sterlite Industries raised $1.5 billion through American Depository Shares, while Tata Steel and Suzlon also raised funds through global depository receipts. Experts note that with successful qualified institutional placements and depository receipt issues, foreign investors see India as an attractive investment destination with limited other options. This increased foreign investment indicates foreign investor interest in Indian companies as well as a desire by Indian companies to access foreign currency and reduce dollar exposure.

1. Foreign investor interest in Indian firms rising
July 21 , 2009
New Delhi: Three Indian companies have raised over $2 billion in two weeks through the depository
receipt route, strengthening belief that foreign investors are once again looking at Indian companies.
While metals major Sterlite Industries raised $1.5 billion through American Depository Shares (ADS) last
week, steel producer Tata Steel raised $500 million through a global depository receipt (GDR) issue.
Wind energy company Suzlon has also announced plans to raise $108 million by issuing GDRs.
"Foreign investors are finding India as an attractive destination. There are also not too many places left to
invest," said SMC Capitals equity head Jagannadham Thunuguntla.
"This can be seen not only through the recent successful ADS/GDR issues but also from QIPs (qualified
institutional placements) that companies resorted to," said Thunuguntla.
QIPs are capital raising tools through which companies allot shares or any other security to institutional
investors to raise funds. The money raised is in rupee denomination.
ADS and GDR are negotiable securities listed on another country's stock exchange. Subscription to the
same gives the company funds in dollars or some other foreign currency.
The recent success of both these fund raising routes indicates that Indian companies not only want to
reduce exposure to foreign currencies, but also the interest of foreign institutional investors (FIIs) in
Indian companies.
"Earlier, when QIPs became successful in June, everybody thought FIIs were reducing their exposure to
the dollar. But now with ADSs and GDRs also picking up, the interest seems to be in the companies,"
added Thunuguntla.
In further proof of a resurgence in the capital markets, fund raising in different modes of public offers,
rights issues and QIPs have substantially picked up.
It grew more than 13 times to Rs.9,408 crore for the quarter ending June 30 in comparison to Rs.664
crore in the quarter ending March 31. (IANS)