Firms mop up excess of Rs 4,000 cr via QIPs

Qualified institutional placements (QIPs) are the flavor of the season for domestic corporates. This year, 15 companies have raised Rs 3,779.45 crore this route. Another 3-4 are expected to hit the QIP market in the next 3-4 weeks, said investment bankers.

The emergence of the new route has slowed down in companies going abroad for global depository receipts (GDRs) floats.

The Securities and Exchange Board of India (Sebi) had introduced the new instrument in June aimed at discouraging companies going abroad for equity issuances.

According to the Sebi guidelines, listed companies can raise funds by placing shares with qualified institutional buyers, such as foreign institutional investors (FIIs), domestic financial institutions and mutual funds.

The companies which have taken to this route in recent weeks include IVRCL Infrastructure Projects (Rs 555 crore), Peninsular Land (Rs 600 crore), AIA Engineering (Rs 125 crore), Mahindra Gesco (Rs 474 crore), Ansal Properties (Rs 682 crore), Bombay Rayon Fashions (Rs 300 crore), Marico (Rs 151.38 crore) and Apollo Tyres (Rs 250 crore).

Placement of shares with foreign and domestic institutions is much quicker and cost-effective too, said a banker.

"For corporates that are listed, the QIP route is a good option to raise funds from domestic equity market," said P P Jain, director - investment banking, Anand Rathi Securities, which was one of the lead managers for Ansal Properties. Anand Rathi Securities is in talks with two more companies to raise for QIPs.

The overseas secondary equity offerings for 2006 amounted to Rs.7,410.10 crore till November, as per Prime Database.

Analysts say since the launch of QIPs in India, there was a drastic fall in GDR issuances.

"The QIP route prevent exporting of domestic capital market and it is a preferred route now," said Prithvi Haldea, managing director, Prime Database, which tracks resource mobilisations by domestic companies.