State Bank of India’s qualified institutional placement (QIP) for an amount of Rs 15,000 crore, which opened on Monday, is the biggest ever. The size of top ten QIPs over the last ten years or so, including the ongoing issue of SBI, aggregates to Rs 60,651 crore. Banks and financial institutions accounted for three-fourths of these QIP issues. With benchmark indices rising to record highs and the sentiment on the Street, fund-raising through QIPs has gained the traction. So far in FY18, five companies have raised Rs 7,298 crore through the QIP route. SBI’s placement was priced with a floor price of Rs 287.58 per share. This issue is nearly twice as large as the earlier one, which fetched the lender Rs 8,032 crore in January 2014. In January 2014, SBI had hoped to raise Rs 9,600 crore but ended up raising Rs 8,032 crore with the Life Insurance Corporation of India (LIC) picking up a big chunk of around 41% of the total shares sold. After SBI, private sector lender Kotak Mahindra Bank’s QIP which raised Rs 5,803 crore in May 2017 is the biggest. Kotak Mahindra Bank sold 6.2 crore shares at Rs 936 per share. SBI’s QIP will help the bank bolster its capital adequacy and expand its lending. Yes Bank raised Rs 4,906.65 through a QIP in April 2017, selling 3.27 crore shares at Rs 1,500 per piece. More than 60% of the shares were bought by global long-only funds, 20% by domestic long funds and another 20% by international hedge funds.
HDFC, Axis Bank, IndusInd Bank and India Bulls Housing Finance are the other companies from the banking and financial sector, which feature in the top ten QIPs. The non-banking firms who feature in the top ten issues include Reliance Communications and Adani Enterprises – both together raised Rs 8,808 crore. QIP is a capital-raising tool through which listed companies can issue equity shares, fully and partly convertible debentures, or any securities other than warrants that are convertible into equity shares to a qualified institutional buyer.