Fund raising in India via QIPs to hit record; here is why

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New Delhi | Published: September 7, 2017 2:43:56 AM

The total fund-raising through qualified institutional placement (QIP) is set to hit an all-time high with the launch of Bajaj Finance’s Rs 4,500-crore issue on Tuesday.

QIP, rupees, Bajaj FinanceThe company has set a floor price of Rs1,771.90 for the issue. The shares of Bajaj Finance on Wednesday rose 3.93% and hit a record high. (Reuters)

The total fund-raising through qualified institutional placement (QIP) is set to hit an all-time high with the launch of Bajaj Finance’s Rs 4,500-crore issue on Tuesday.

So far this year, 18 companies have raised Rs 34,881.52 crore through QIPs. In 2009, 54 companies had raised Rs 34,675.75 crore, the highest amount ever raised through QIPs.

The company has set a floor price of Rs1,771.90 for the issue. The shares of Bajaj Finance on Wednesday rose 3.93% and hit a record high.

State Bank of India’s (SBI) Rs 15,000-crore offer was the biggest in CY17 so far. The lender had issued around 52.21 crore new shares at a price of `287.25. SBI came with the offer 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 `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.

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 CY17. Hindalco, Brigade Enterprises, Delta Corp and Premier Explosives were some of the  companies which raised money through QIPs. Banks constituted 82%, or Rs 28,716 crore, of the Rs 34,881 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.

QIP is a capital raising tool wherein a listed company can issue equity shares, fully and partly convertible debentures, or any security other than warrants that are convertible into equity shares. But unlike in an IPO or an FPO, only institutions or qualified institutional buyers can participate in a QIP.

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