QIP charm in FY23: 20 firms raise ₹18,400 crore in first half of FY24, showcase four-fold increase within a year

Current financial year witnessed an increase in the popularity of Qualified Institutional Placement (QIP) route for fundraising among Indian firms. In the first half of FY24, around 20 companies mobilised over ₹18,400 crore. The amount was four times more than the amount of fund raised in the same duration a year-ago.

In the first-half of current financial year, 20 companies collected ₹18,443 crore through QIPs. The amount was way higher than ₹4,022 crore raised in the same period last year, reported PTI referring to prime database.com.

The increase in fundraising via QIP indicates an improvement in investors sentiments. The trend in fundraising via QIP is expected to persist throughout the second half of the year too, Sanjay Moorjani, Research Analyst at SAMCO Securities, told PTI.

Prashant Rao, Director and Head of Equity Capital Markets, Anand Rathi Investment Banking, said that market and investor sentiments play an important role for these issuance. Till the time market sentiments are positive and investors are earning returns, listed companies would prefer to raise funds through QIP which allows them to have faster access to funds.

"We believe the second half of this year also to be positive for QIP issuances," he added.

Largest QIP funding in FY24 so far

Till now, Union Bank raised largest fund via QIP this year. The state-owned bank mopped up ₹5,000 crore, accounting for 27 per cent of the total QIP amount. The bank raised the amount to augment its capital base. QIP of a REIT of Brookfield India Real Estate Trust garnered ₹2,305 crore during the period under review.

The QIP issuance mainly included financial services and power generation companies. Companies of these two sectors accounted for 70 per cent or ₹12,890 crore of the overall amount.

"The resurgence in fundraising activity through QIPs signifies a growing confidence among investors and businesses alike. As companies seek fresh capital, they are positioning themselves to seize new growth opportunities and expand their operations. This surge in the fundraising activity clearly shows that the private capex has started to revive," SAMCO Securities' Moorjani said.

The rising trend of QIP for raising funds was fuelled by positive market and investor sentiments, believes Anand Rathi Investment Banking's Rao. Despite sluggish growth of the market in the first half of FY23, the markets have done well and have remained positive through the first half of FY24.

About Qualified Institutional Placement

QIP route is generally less complicated and easier compared to IPOs and FPOs. Listed companies opt for this method to meet their capex/opex requirements or to comply with Sebi's 25 per cent minimum public shareholding norms.

QIP is one of the quickest and simplified way to raise funds from institutional investors. Only listed firms can use this method for funding. Opting this way helps them to mobilise funds quickly from institutional investors without the need to submit any pre-issue filings to market regulators.