Not just retail investors, QIBs also burn fingers

Written by Markets Bureau | Mumbai, Feb 28 | Updated: Feb 29 2008, 05:21am hrs
Its not just retail investors who have been battered on The Street. The qualified institutional buyers (QIBs) too have bruises all over. Data from Prime Database shows at least 21 qualified institutional placements (QIP) made since September 2007 are quoted below the issue price. These 21 companies raised Rs 15,640 crore by placing their shares with the QIBs; the market value of this holding has fallen to Rs 12,801.40 crore since. This is a loss of Rs 2,838.60 crore and a value decline of 18.15%.

Prithvi Haldea, managing director of Prime Database, said, Market volatility has taken its toll not only on the newly listed stocks but also on the already listed stocks (QIPs). These QIPs were priced at market price, when the market was ruling high. The market prices of these stocks have fallen like any other Sensex stocks, which are currently traded 20-25% lower from their peak. This does not mean that QIP as a product has failed. Investors participating in QIPs are institutional investors and they invest in such products with a long-term horizon, with their own assessment about the stock and the sector. Hence, the return on such stocks or sectors has to be viewed from the long-term perspective.

A QIP is the placement of shares made by a company to institutional investors, who are called QIBs. Sebi guidelines say only QIBs can participate in QIPs.