The total amount raised by companies through the qualified institutional placement (QIP) route has hit nearly Rs 34,000 crore in the first half of 2017, a year in which the stock markets have hit new highs. This is the highest quantum raised via this route, in the past eleven years, according to data sourced from Prime Database. A total of 15 companies have come out with QIP offers so far in 2017 including some of the biggest in the past 11 years year-to-date. State Bank of India’s (SBI) Rs 15,000-crore offer has been the biggest issuance in 2017 so far. SBI’s offer has been the biggest such equity issuance in the country; the lender had issued around 52.21 crore new shares at a price of Rs 287.25. SBI issued the shares to augment its capital adequacy ratio and for general corporate purposes.
After SBI, Kotak Mahindra Bank’s offer was the biggest. The private lender had raised Rs 5,803 crore in May 2017. Kotak’s offer was to enable its founder Uday Kotak to bring down his personal stake to the RBI mandated levels. Uday Kotak at present has 29.78% stake in the bank. Yes Bank which had to scrap its QIP in September 2016, successfully raised Rs 4,906 crore in March 2017. Federal Bank, DCB Bank and United Bank of India were the other banks which raised money through QIPs in CY 17.
Hindalco, Brigade Enterprises, Delta Corp and Premier Explosives were some of the other companies which raised money through QIPs. Banks constituted 84%, or Rs 28,716 crore, of the Rs 33,912 crore raised through QIPs. Market participants said the need for tier-1 capital and the necessity to meet Basel III requirements as the reasons for banks opting for QIPs.
In the first have half of CY 16 Rs 528 crore was raised through the QIP route and total amount raised in that year was Rs 4,712 crore. The highest amount raised through QIPs in the past eleven years was in CY09 – 53 companies raised Rs 34,675.75 crore in that year.
Market participants, however, said it will be wrong to say that QIP trend has started. “The entire jump is because of a handful of big issues. I don’t think QIP as a trend has started; we clearly need people to start their CapEx programme before QIPs become widespread,” said an investment banker who requested not to be named.
By Sundar Sethuraman