QIP : A Boon for Corporate India

by khalid on 10/10/2009 · 0 comments

QIP

QIP (Qualified Institutional Placement), refer to issue of shares to cash-rich institutional investors. Companies are using this way of raising funds to fuel growth while raising funds from the primary market through IPOs and follow-on offers is a difficult task in the current market conditions.

Fund raising through QIPs has increased 10 times if we compared with the last year levels for the same time period. For last 9 months (Jan–Sep09), Indian companies raised Rs 21209 crore. It was Rs 2104 crore for the same period last year (Jan- Sep 08). It is intresting to note that during (Jan-Mar09) period saw no QIP issues

Strong signs of easing recession and the depreciating US dollar are inducing more and more companies to take Qualified Institutional Placements (QIPs) route to raise funds.

Lakshmi Narayanan of Bonanza Portfolio is of the view that improving domestic economy and depreciating dollar are the two main drivers that turned QIP into a preferred mode of raising funds.

There are at least 49 companies who are in the process of fund raising through QIP issues with the total proposed amount to be raised at about Rs 44000 crore.

Some of the prominent names in this list include Tech Mahindra, Essar Oil, Hindalco, Reliance Communications, Omaxe, Pantaloon Retail, Parsvnath, Ansal, Jet Airways, RNRL, JSW Steel, L&T, etc.

While some companies choose to raise funds through alternative instruments such as American Depository Receipts or Global Depoistory Receipts (GDRs) with underlying shares, QIPs in general are looking strong this year.

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