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Funds raised through QIPs have soared
Jun 10, 2014

With euphoria returning to markets the fund raising exercise has also gathered momentum. Take the case of money raised via qualified institutional placement (qip-in-stock-market?utm_campaign=SEO-K'>qip-in-stock-market?utm_campaign=SEO-K'>QIP) for example. In this calendar year, corporates have raised Rs 114.5 bn in the first five months itself via the QIP route. This is about 30% more than what they raised in entire previous calendar year! Renewed investor confidence amidst change of power at the Centre has given a new lease life to the QIP markets as witnessed in today's chart. Expectations that the new government will improve business environment has led corporates to expand their balance sheets. And for now QIP seems to be the preferred mode.

But it may not be long before the IPO market too witnesses the same kind of momentum. Corporates that were eagerly waiting on the sidelines to raise money from primary markets will jump in the fray soon. However, this is the time when investors need to be more cautious. It should be remembered that corporates raise money when they can do so rather than when they actually need it! And the current market conditions are perfect for them to raise money. As such, investors need to be extremely vigilant while applying to any new IPO issue. They should focus on fundamentals and valuations and must not get carried away by the current hysteria.

*So far in 2014
Data Source: Business Standard

This Chart Of The Day was published in The 5 Minute WrapUp - Should you invest based on 'debt repayment' theme?

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