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QIPs Are Making a Comeback
Sep 28, 2016

The last three years have seen quite a surge in qualified institutional placements (QIPs). While 2016 started off on a poor note, the month of September alone has seen Rs 32 billion raised through 6 issues. Infact, an article in the Economic Times highlights that Indian companies are expected to raise Rs 100-120 billion through QIPs in the next few weeks. Liquidity in the market is one big reason for the increasing appetite for QIPs. Most promoters believe the valuations also to be fair and are capitalising on the opportunity to raise funds through this route for immediate spending needs and also to clean up their balance sheets. Also, QIPs tend to be a faster way to raise capital as the dealing happens with a few investors - only institutions in this case. And this is why companies prefer this route - because of its convenience and less resource requirements when compared to other methods of raising equity.

Banks in particular have been keen on raising funds to shore up their capital in an environment where the asset quality risks in the banking sector have risen. Even for the other sectors, as investment activity picks up, capex will see a revival too. Thereby, supporting the case for a rise in QIP activity in the coming quarters.

Data Source: Prime Database, Economic Times

This Chart Of The Day was published in The 5 Minute WrapUp - Burnt! Investors Who Ate This Pizza When it was Too Hot

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