Funds mop-up via preferential route tumbled 48% in May: Sebi

Raising funds through issuing shares to promoters and shareholders on preferential basis plunged by 48 per cent to Rs 5,407 crore in May due to volatile market conditions. After touching <g data-gr-id="21">3-year</g> high of Rs 10,485 crore in April, funds garnered by companies through preferential allotments fell to 5,407 <g data-gr-id="20">crore</g> in May, as per the latest data of the Sebi. The April figure marked the highest level of fund raising since May <g data-gr-id="19">2012,</g> when the companies had mobilised a total of Rs 14,987 crore through preferential route. 

Besides, the number of preferential issues dropped to 30 in May, from 37 in the preceding month. Market participants said fresh capital raked in through preferential allotments mode has declined due to volatile market conditions. Under the preferential issue, companies raise money by selling shares to a select group of existing investors, rather than to the public at large. Generally, shares are issued to promoters or investors with a longer time horizon, as it comes with a lock-in of one year, <g data-gr-id="23">analyst</g> said. 

"The cumulative amount mobilised through preferential allotments route during 2015-16 (April-May), so far, stood at Rs 15,891 crore," Sebi noted.