Indian companies? equity fund-raising via private placement touched a three-year high in calendar 2013, as qualified institutional placement (QIP) and institutional placement programme (IPP) remained one of the preferred ways for companies to raise capital as well as comply with the regulator?s shareholding norms.
As per Prime Database statistics, 21 listed Indian companies raised a total of Rs 12,831.27 crore through QIPs and IPPs during the last 12 months, up 131.36% from CY12. The amount includes Rs 8,008.24 crore raised by nine companies via QIPs and Rs 4,823.03 crore by 12 companies via IPPs.
Indian companies raised Rs 5,545.87 crore (Rs 4,704.61 via QIP and Rs 841.26 crore via IPP) in CY12, whereas the total amount via private placement stood at Rs 3,459.49 crore in CY11. Fund-raising through QIPs and IPPs had touched a record of Rs 34,675.75 crore in CY09, data showed. Merchant bankers said private placement was among the most preferred routes ? apart from offer for sale (OFS) ? for its ease and cost-effective benefits, helping companies comply with Securities and Exchange Board of India (Sebi) minimum public shareholding norms.
According to Sebi regulations, privately held listed companies were required to reduce promoter shareholding to 75% by June 2013, while state-owned listed entities had to bring down promoter holding to 90% by August 2013.
According to a separate data by Prime, Axis Bank‘s Rs 4,726-crore QIP in January was the biggest ever. The biggest IPP (Rs 1,863 crore) was done by DLF Ltd. Two PSUs ? Neyveli Lignite Corporation (Rs 358 crore) and State Bank of Mysore (Rs 66 crore) ? used the IPP route to reduce promoter shareholding, data showed.
Merchant bankers also highlighted that private placement and secondary market sale via OFS kept i-banks buoyant and helped inflow of revenue at a time when the IPO market remained lacklustre. Bidding of shares is done through the exchange platform and, hence, these instruments are less time consuming and require the least amount of paper work with the market regulator.
?Banks always look to add fee-based income to their overall revenue. Private placement are usually a one-to-two week exercise. At a time when business on the equity side has shrunk, private placement have certainly helped the industry,? said a senior banker of a leading Indian investment banking firm.
I-bankers said that QIP market is expected to see increased activity in the next three months due to additional capital requirement by state-owned banks under Basel III requirements.
Estimates suggest major state-owned banks are expected to raise about Rs 15,000-16,000 crore by end of the current fiscal year. India’s largest lender by assets, SBI has received shareholders’ nod to raise Rs 9,576 crore by end of this fiscal.
Indian companies have raised Rs 5,681 crore via private placement so far this fiscal. In FY13 full-year, Indian companies mobilized Rs 11,552.62 crore via QIPs and IPPs.
