QIP fundraising hits record high this year

Buoyed by bull run, 71 firms mobilise ₹88,678 crore so far

- SUNDAR SETHURAMAN

Fundraising via qualified institutional placements (QIPS) has hit a record high this year with favourable valuations and liquidity support prompting big-ticket launches by large corporates.

QIP is a fundraising mechanism where a company issues new shares to a select group of investors at a discount to the prevailing market rate.

It is the preferred mode for raising follow-up fresh capital in a bull market as it is time efficient and inexpensive.

So far this year, 71 firms have raised 88,678 crore through this route, the highest in a calendar year.

The gains in the equity markets, powered by robust flows from foreign and domestic investors have helped stocks command higher valuations.

Higher valuations, in turn, help companies raise capital with lower dilution.

"Both rights issues and FPOS are long-drawn processes dependent on retail interest. QIPs involve only institutional investors and are completed with much shorter processes. Equity for growth capital is being preferred as the growth based on leverage is not considered appropriate," said Mahavir Lunawat, managing director, Pantomath Capital Advisors.

This year's broad-based rally in equity markets mitigated concerns about investors' ability to absorb additional fresh paper and boosted the morale of firms looking to raise funds.

ARAI provides certification to original equipment manufacturers (OEMs) in accordance with the Central Motor Vehicle Rules and certifies OEMs seeking incentives under various Central government schemes.