Fundraising via QIPs hits all-time high in 2024, exceeds Rs 1 trillion

Fundraising through qualified institutional placements (QIPs) reached an all-time high in 2024, surpassing the Rs 1 lakh crore-mark for the first time ever in a calendar year, fuelled by strong stock market conditions and higher valuations.

Indian companies have raised Rs 1,21,321 crore through QIPs till November, according to data compiled by Prime Database.

This represents a more than two-fold increase compared to the Rs 52,350 crore mobilised in the previous calendar year.

The sharp increase showed market resilience has been a key factor driving this growth as companies will continue to garner capital through Qualified Institutional Placements (QIPs), analysts said.

 

According to the data, 82 companies have tapped capital markets with QIP issues till November this year, compared with just 35 that raised Rs 38,220 crore during the same period last year.

QIP is one of the quickest products to raise funds from institutional investors. It is designed for listed firms and investment trusts, which allow them to mobilise funds quickly from institutional investors without the need to submit any pre-issue filings to market regulators.

Major contributors to the record-breaking year such as diversified conglomerate Vedanta group and food delivery major Zomato raised as much as Rs 8,500 crore each via QIPs.

They were followed by Adani Energy Solutions and Varun Beverages, which raised Rs 8,373 crore and Rs 7,500 crore, respectively.

Other significant QIP transactions during CY24 include Samvardhana Motherson International at Rs 6,438 crore and Godrej Properties at Rs 6,000 crore and KEI Industries at Rs 2,000 crore.

In addition, state-owned lender Punjab National Bank, JSW Energy, Prestige Estates Projects, were also among companies that raised capital through the QIP route to bolster their financial reserves.

As per Prime Database, financial services company JM Financial emerged as the top lead manager for the QIP transactions, as it handled 16 issues.

"In 2024, promoters have taken advantage of strong market conditions, leveraging higher valuations and upward trends in the secondary market to raise funds. Our performance reflects our superior distribution capabilities and our ability to handle complex transactions and achieve results for our clients," JM Financial Ltd Managing Director Chirag Negandhi told PTI.

Echoing similar sentiments, Pranjal Srivastava, Partner-Investment Banking, Centrum Capital, said, "CY 2024 has been a landmark year for all forms of public market fundraise, be it IPO, QIPs, or blocks. Listed companies raised record levels of funds through QIPs to meet their funding requirements".

Strong secondary markets, high level of domestic liquidity and overall positive sentiments provided the right backdrop for companies raising funds and ensured all QIPs were well-received in terms of subscription, Srivastava said.

This year's resurgence highlighted the growing influence of domestic investors and retail participation in capital markets.

"The record-breaking fund mobilisation by companies through QIP is the direct consequence of a booming stock market. Experience tells us that a booming secondary market leads to a booming IPO and QIP market," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

The QIP made a dramatic comeback in CY23, after fundraise through this route dipped in 2022, lowest in eight years, when Rs 11,743.29 crore was raised through 14 issues amid volatility in the stock market, high valuations among other factors.

This year, the QIP rally underlines the robust inflow from retail and domestic investors segments.

Since the Indian stock market has been resilient during the last four years and there is enough institutional demand for good issues despite high valuations, promoters are making hay while the sun shines, Vijayakumar added.

With Torrent Power, Bharat Forge, Senco Gold, and Sammaan Capital's QIP fundraise worth more than Rs 8,000 crore in December, analysts expect India Inc to go up further by the end of the calendar year, cementing 2024 as a milestone year for QIPs in India.