Presented by Aritra Banerjee

QIP:--

Qualified institutional placement (QIP)  is  a  capital-raising tool, primarily used  in  India and other parts of southern  Asia,  whereby  a listed  company can  issue equity shares,  fully and partly convertible debentures, or  any  securities  other  than  warrants  which  are convertible to equity shares to a qualified  institutional buyer (QIB).

Source: Wikipedia

Some Facts About QIP:--• The Securities and Exchange Board of India (SEBI) introduced the QIP on May 8, 2006.

• To prevent listed companies in India from developing an excessive dependence on foreign capital.

• Prior to the innovation of the qualified institutional placement, Indian companies were accessing international funding via issuing securities, such as American depository receipts (ADRs), in outside markets.

• QIP guidelines were introduced to encourage Indian companies to raise funds domestically instead of tapping overseas markets.

QIB:--• Registered with SEBI• Expert Class of Investors• Covers wide range of Institution:-• Foreign institutional investor• Indian mutual fund• PFI• Indian banks• Indian Insurance Companies

Benefits of QIP:--• Time saving: QIBs can be raised within short span of time rather than in

FPO, Right Issue takes long process.

• Rules and regulations: In a QIP there are fewer formalities with regard to rules and regulation, as compared to follow-on public issue (FPO) and rights Issue.

• Cost-efficient: The cost differential vis-à-vis an ADR/GDR or FCCB in terms of legal fees, is huge. Then there is the entire process of listing overseas, the fees involved. It is easier to be listed on the BSE/NSE vis-à-vis seeking a say Luxembourg or a Singapore listing.

• Lock-in: It provides an opportunity to buy non-locking shares and as such is an easy mechanism if corporate governance and other required parameters are in place.

QIP Regulations:--

• Issuing company must be Listed

• Atleast 2 allottee if the lot size of securities is upto Rs. 250 crore.

• Atleast 5 allottee if the lot size of securities exceeds Rs. 250 crore.

• No individual allottee is allowed to have more than 50% of the total amount issued.

• No issue is allowed to a QIB who is related to the promoters of the company.

Some QIP Practices:-- Yes Bank hires Goldman Sachs for $1 billion QIP (Tue, Jun 21 2016. 01 24 AM IST / live mint)

[In June 2014, the bank had raised $500 million (Rs2,900 crore) through a QIP. Then Yes Bank had hired Deutsche Bank AG, HSBC Holdings Plc, Motilal Oswal Securities Ltd, JM Financial Ltd, UBS AG and Goldman Sachs for the fund raising.]

ADB, IFC, GIC queue up for IDBI QIP ( The financial express july 2 , 2016)[State-run IDBI Bank will likely complete its proposed Rs 3,771-crore qualified institutional 

placement (QIP) to  potential investors such as Asian Development Bank and International Finance Corporation by September end if markets remain stable, a senior government official said on Friday.]

Hester Biosciences gains on fund raising plan via QIP ( june 26, 2016, mint)Hester Biosciences has rallied 9% to Rs 777 on the BSE after the pharmaceutical company said 

that it is planning to raise funds by issuing shares via qualified institutional placement (QIP).

Cont..

JSW Steel seeks to raise up to $2 billion via foreign currency bondsJSW Steel will also seek a nod to raise up to Rs4,000 crore through equity shares and debentures through a QIP issue.

United Bank to raise Rs 1,000 cr via equity issue to QIBs:-- State-owned United Bank of India on June 29 said it plans to raise Rs 1,000 crore through issuance of equity to qualified institutional buyers (QIB).

Syndicate Bank plans to raise Rs 4,300 cr: Giving details of its annual general meeting, the bank further said it has also plans to raise Basel-III complaint additional tier-I bonds up to Rs 1,000 crore and tier-II bonds up to Rs 1,600 crore.