Preferential offers are emerging as a key source of funds for India Inc to fund its growth plans.

But this trend is not restricted to the high-profile names alone. Over 60 small and mid-sized companies have also lined up preferential issues to promoters over the past month alone.

A combination of equity shares and convertible warrants is the mix most often adopted for preferential allotments to promoters. While preferential allotment of equity requires the investor to put up the money upfront, issue of warrants usually allow staggered payments, usually over an 18-month time window. Usually, investors are required to put up only 10 per cent of the price upfront in the case of warrant issues.

Preferential allotments also offer a backdoor route for promoters to significantly hike their stakes in listed companies.

This may indicate that India Inc’s promoters are still quite sanguine about the valuations that their stocks enjoy in the markets.