Firms mop up Rs 28,000 cr via QIPs in FY15; highest in 5 years

Fund raising via qualified institutional placements (QIP) hit a five-year high of over Rs 28,000 crore in 2014-15, indicating increased interest among domestic firms to mop-up capital via this route.

QIP is a capital-raising tool, whereby a listed firm 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.

According to latest data, companies mopped up Rs 28,429 crore through the QIP route in the financial year ended March 31, 2015, much higher than Rs 9,402 crore raked in the previous financial year.

This was the highest fund raising through this route since 2009-10, when firms had raked in Rs 39,768 crore. The number of QIP issues, too, shot up to 55 during FY15 from mere 6 in 2013-14. Most of the funds raised through QIP were for expansion plans and to support working capital requirements.

According to the data, there was a large gap between the capital raised through QIPs and funds garnered via other routes like initial public offerings (IPOs). A total of Rs 6,750 crore was raked up through rights issue, while Rs 2,769 crore was mopped up via IPO during 2014-15 financial year.

That apart, around Rs 400 crore was garnered from Institutional Placement Programme (IPP).

Market experts said that return of investor confidence in the equity markets encouraged some of the large firms to mop up funds through the QIP route.

Most of the funds raised through QIP were after the general election results in May, thus clearly showcasing the revival of investor sentiment backed by a strong secondary market, they added.

Among the firms which garnered funds via QIP segment in FY15 included State Bank of India (SBI), YES Bank, Idea Cellular and Reliance Communications. The fund raising was in line with the soaring markets where the benchmark Sensex gained around 25 per cent in 2014-15.