Corporates mop up Rs 31,000 cr thru QIPs
| Coming year likely to see more issues, say bankers. |
Ravi Ranjan Prasad
Mumbai, Dec. 10
Qualified institutional placements (QIPs) were the preferred route for raising funds by the listed entities in 2009, the new year may see more QIPs than the current year, investment bankers said.
So far this year, 41 listed companies have raised Rs 31,102 crore from the market, this is the highest amount raised since QIPs were introduced in May 2006. However, 2008 saw only 4 issues worth Rs 3,586 crore due to weak market sentiment.
Follow-up on success
The first successful QIP issue was from Unitech Ltd in March 2009, the company raised a total of Rs 4,410 crore in two tranches.
After Unitech's success, which came after a long period of lull in the QIP market, there were several QIPs. Real estate firms that were finding hard to raise loans opted for QIPs; they included Indiabulls Real Estate, HDIL, Parsavnath Developers, Sobha Developers.
Investment bankers said, going forward, there is a robust pipeline for QIPs; the trend is likely to continue even in 2010, with plenty of QIP proposals waiting for right market conditions.
"December is a difficult month as most of the investors are on holiday, but the first quarter of the New Year is definitely going to see more QIPs," Mr A. Murugappan, Executive Director, ICICI Securities said.
"QIP proposals worth Rs 42,942 crore are in pipeline from 54 companies that have their Board/shareholders resolutions for raising funds through QIP," Mr Jagannadham Thunuguntla, Equity Head, SMC Capital, said.
Some of the large QIPs that have received Board/shareholders' resolutions include: Tech Mahindra (Rs 1,033 crore), Reliance Infrastructure (Amount not disclosed), Adani Enterprises(Rs 4,000 crore), Gammon India (Rs 929 crore), Ansal Properties and Infrastructure(Rs 1,500 crore)
Win-win situation
QIPs were introduced in the Indian market in May 2006, only Qualified Institutional Buyers (QIBs) are eligible to participate in QIPs, according to SEBI regulations.
"Since there is no lock-in period, investors can exit any time after investing in QIPs. So QIPs are a win-win proposal for both promoters and investors," Mr Jagannadham Thunuguntla said.
Most of the money in the QIPs in 2009 has come from foreign institutional investors. Domestic financial institutions were initially not too keen to invest in these QIPs, but they did invest in those that hit the market later.
Reacting to the late response from domestic investors Mr Murugappan said, "It depends on quality of issue."
