Fundraising via QIPs in 2018 so far less than half of same period last year

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Mumbai | Published: August 15, 2018 12:28:41 AM

The total amount raised by companies through the qualified institutional placement (QIP) route in the first seven months of 2018 at Rs 15,963.39 crore is less than half the Rs 34181.52 crore raised in the same period in 2017.

Fundraising via QIPs in 2018 so far less than half of same period last year

The total amount raised by companies through the qualified institutional placement (QIP) route in the first seven months of 2018 at Rs 15,963.39 crore is less than half the Rs 34181.52 crore raised in the same period in 2017.

Market participants said heightened volatility in the stock markets over the last six months is the main reason for the smaller quantum of funds mopped up via QIPs.

“H1 CY2017 witnessed some large QIPs from the banking sector. Hence the quantum of figure raised in H1 CY2017 is high. Once markets stabilise, we shall see more companies raising monies through the QIP route,” said Nipun Goel, head- Investment Banking at IIFL.

The first half of 2017 had some of the biggest QIPs in the past 11 years, including State Bank of India’s Rs 15,000 crore offer on June 2017.

Banks and NBFCs have dominated the QIP offers in 2018 so far and constituted Rs 6,820.99 crore or 42% of the total amount raised so far.

HDFC Bank, JM Financial, L&T Finance, and Jindal Steel and Power are some of the companies who came with QIP offers in 2018.

“Generally, banks and NBFCs need capital every 2-3 years to fund their growth requirements. As the economic growth picks ups, we shall see continued fundraising by banks/NBFCs. Additionally, as capacity utilisation improves, we expect a number of manufacturing companies to raise capital through QIPs for capex purposes,” said Goel.

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

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