Mumbai, Dec 11 (Inditop.com) In a year which started with doomsdayers predicting a frightful scenario for businesses, Indian companies found the qualified institutional placement (QIP) route more than a blessing, having earned over Rs.31,000 crore this way.
Since January, corporates have raised a whopping Rs.31,102 crore through 42 QIP issuances, under which securities are placed with institutions much like private placements, said a report by brokerage firm SMC Capitals.
Unitech was the first to venture out with a QIP this year and managed to raise Rs.4,410.43 crore — about 89 percent of the target set by its board of directors.
“It was a courageous move on part of the company given the market mood at the time. The success of this QIP issuance has led the way for a series of Indian corporates to choose the QIP route for their fund raising,” said Jagannadham Thunuguntla of SMC Capitals.
Among other companies that met with success in raising money through the QIP route were Indiabulls Real Estate, Texmaco, Emami and Dewan Housing.
In fact, fund raising through QIP in 2009 exceeded levels seen in 2007 when the stock markets were going gung-ho, giving strength to the notion that QIPs have replaced initial public offerings (IPOs) as the chosen method for raising money in corporate India.
During 2007, the total funds raised through QIPs stood at about Rs. 20,011 crore through 29 QIP Issuances.
“This probably underlines the fact how strongly the QIP market has come back on the back of market recovery in 2009,” said Thunuguntla.
The QIP pipeline is appearing strong in 2010 as well with at least 54 companies awaiting shareholders’ approval to raise about Rs.42,942 crore.
Alongside, response from retail investors for IPOs has been lukewarm, signifying that prices were set too high.
The recent JSW Energy IPO saw only 40 percent subscription level in the retail segment.
In this segment — individuals who are applying for shares worth less than Rs.1 lakh — only Rs.3.27 crore-worth shares were subscribed out of the Rs.8.09 crore.
