Firms to raise Rs 13,000 crore through such issues in the next two months.
After a lull, the market for qualified institutional placements (QIPs) has again picked up. A slew of companies have lined up QIPs for raising a total of Rs 13,000 crore in the next one or two months. Tata Motors has successfully raised money and also gone for a ‘green shoe option’, allowing it to raise more money.
“A QIP is a bull market instrument and it makes sense for investors to get shares at less than the current market price (as a QIP’s floor price has to be the average of the last 15 days). If the bull run continues, we could see a large number of QIP issues, the pipeline of which is very strong,” said Prithvi Haldea, chairman and managing director, Prime Database.
Reliance Media Works, Aban Offshore, Manappuram Finance, IRB Infra and Bombay Rayon are some companies that have passed resolutions in recent weeks to raise funds through various instruments, including QIPs. In September, 32 companies announced intention to raise money through QIPs, says Prime Database. In the current financial year so far, 31 companies have raised nearly Rs 15,990 crore (against Rs 43,970 crore from 67 issues in the same period last year) through this instrument.
Investors find QIP attractive as there is no lock-in and hence they can book quick gains if prices continue to rise. In 2008-09, just two companies took this route, raising Rs 188 crore.
Sinnce May, 127 companies announced intention to raise money through QIPs, but could not do so because either the market prices of their stocks were not favourable (as the recent rally is mostly in large cap stocks) or some formalities/documentation were pending.