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QIPs Outpace IPOs in Fund Raising by Desi Corporates

Published: 16th October 2014 06:00 AM  |   Last Updated: 15th October 2014 11:32 PM   |  A+A-

MUMBAI: Even as the government dithers on starting off its ambitious disinvestment process to sell stakes in the state-run companies, several private sector companies have taken advantage of the improvement in stock market sentiment, a quick rise in share prices and a healthy appetite of local and overseas institutions post general elections.

Sensex rose about 25 per cent since the beginning of the year and share prices of several companies have gained a lot more. A large part of the rally in shares was participated to by institutions with knowledge, expertise and ready cash. So, to a large extent retail investors were not able to be part of the rise as much.

Likewise, companies selling shares to cash in on the stock market rise too found institutions more convenient than seeking out retail investors. According to Prime Database, as many as 19 issuances to qualified institutional placement (QIP) and one sale in institutional placement programme (IPP) helped the issuers raise Rs 20,589 crore in the first half of the fiscal to September 30.

In the corresponding period last year, the amount raised was Rs 5,402 crore. QIPs last year mopped up just about Rs 1,222 crore, while Rs 4,180 crore was raised in IPP. The largest QIP this year was by Reliance Communications of Rs 4,808 crore.

Companies planning initial public offerings are yet to pick up. Twenty-five companies raised Rs 1,019 crore in IPOs and Rs 2,593 crore in OFS, taking the total to Rs 3,612 crore in the first half of the current financial year, compared with Rs 6,676 crore.

“In the coming quarter many more companies could come out with IPOs as HNIs and retail investors look to invest,’’ said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd.

“The response to the few IPOs last quarter was stupendous as was the quick gains. Primary markets could also be on an upswing.’’

As the government prepares for its disinvestment process of Rs 58,000 crore to get underway, several other companies too are likely to join in share sales once their prospectuses are approved by SEBI.



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