Now smaller companies have additional access to fund raise enabling mobilization of capital for growth
FinTech BizNews Service
Mumbai, September 18, 2024: Companies issue bonds through Public Issues to mobilise funds largely from retail and HNI segment - helps corporate treasuries to diversify investor base. These are called Bond IPOs in common parlance rather incorrectly as it is NOT an 'Initial' Public Offering as companies may issue frequently. The main benefit of Public Issues historically has been the low entry point where minimum investment amount is just Rs.10,000 (US$120). Now private listed corporate issuances have also been reduced to Rs.10k face value (subject to certain conditions), but Public Issue remains the best route for outreach to the investor masses.
From the infographic below (source: SEBI), FY 2024-25 saw 45 issues with 25 unique issuers. The larger number and diversity of issuers has perhaps been possible due to OBPs who are garnering retail investment into bonds due to bigger outreach and harnessing technology to make it easier for the investor. Now smaller companies have additional access to fund raise enabling mobilization of capital for growth. However, the amount raised through Bond Public Issues (Bond IPOs) are merely little over 2% of the total corporate bond issuance in the year as the fixed income industry has largely been an institutional play.
According to Mr. Vishal Goenka, Co-Founder of IndiaBonds.com - “I see this landscape changing and Public Issues becoming a go to route for many corporates in the future. Historically, companies have even done Bond Public Issue to the tune of Rs.10k crores (US$1.2 bn). Public Issues are beneficial for various reasons:
- more transparency and disclosures for the investors
- more liquidity in secondary market
- easily understandable price discovery
- diversification of funding base for issuers
- great entry point for first time investors
- allocation is simply first come first served
It's never too late to start investing in bonds and Bond Public Issues offer a great easy way to dip your toes! Make sure you read the offer documents carefully before getting in. A Bond in Every Hand!.”
