look news india
Ahmedabad: Companies have raised a record capital of Rs 88,678 crore this year through Qualified Institutional Placement (QIP). This was mainly driven by favorable valuations and cash flows from large projects undertaken by large companies.
Under QIP, companies raise capital by issuing new shares to a select group of investors, usually at a price below the current market price. This is the preferred means of raising capital during bull markets as it takes less time and costs less.
So far this year, 71 companies have raised a record Rs 88,678 crore under QIP. Share prices of many companies are at record highs due to the boom in the stock market and strong inflow of foreign and local investors. Higher valuations have helped companies raise more capital by issuing fewer shares.
Both rights issue and FPO are long-term processes and depend on the participation of retail investors. Only institutional investors participate in QIP and it is completed in a very short period of time.
QIP is a product of market boom times. Whenever the market rises, companies come to the market with QIP to issue new shares at higher valuations.
Last year, banks had the dominance in raising capital through QIP, but this year companies from every sector from automobile to textile are raising capital through it.
Highest Rs. Rs 15,653 crore has been collected by power generation companies. After this, housing and real estate companies have raised Rs 12,446 crore through QIP. Four banks have Rs. The capital raised is Rs 12,100 crore, which consists of three public sector banks.