Optimistic domestic and foreign institutional investors coupled with uptick in private capex and growth prospects led to a boom in qualified institutional placements (QIPs) in the first half of FY25.
April to September 2024 saw 46 QIPs raising ₹69,725 crore. This is the highest half-yearly fundraise in the last 10 years both in terms of number and value of QIPs, as per data sourced from Prime Database.
The value of funds raised through QIPs grew 180 per cent from the same period last year and the number of deals more than doubled from the prior period. On a full fiscal year basis, FY24 saw 64 companies raise money through QIPs totalling to ₹71,306 crore, and companies have already raised 98 per cent of this amount in the first six months of FY25.
QIPs are a way for listed companies to raise capital without having to go through all the paperwork involved in raising money from the markets. It is thus seen as a quicker mode of fundraising compared to going for follow-on public offer (FPO).
Only qualified institutional buyers (QIBs) such as mutual funds, banks, insurance companies, and foreign institutional investors can participate in a QIP. Even as Initial Public Offerings (IPOs) have touched record highs this fiscal, the fund mop up through QIPs still makes up around 43 per cent of the total equity raise in April to September 2024.
Analysts note that bull markets, attractive valuations and increased liquidity in the hands of domestic institutions such as mutual fund houses are helping fuel the QIP boom.
‘A reflection of the bull market’
“QIPs are essentially a reflection of the bull market,” said Yatin Singh, CEO, Investment Banking, Emkay Global Financial Services. “The increase in QIPs generally indicates that companies anticipate healthy growth prospects and are setting out to raise growth capital for their plans at attractive valuations,” he said. Mutual funds are flush with capital and this money is finding a place in QIPs, he added.
A sectoral analysis of companies that have raised money under the QIP route this fiscal shows that energy, infrastructure and auto components enterprises make up 21 per cent, 15 per cent and 14 per cent of the total fundraise.
Furthermore, 37 out of the 46 QIPs were floated post the Lok Sabha poll results in June. In value terms, 80 per cent of the amount mobilised through QIPs were in Q2 FY25. Vedanta’s QIP of ₹8,500 crore in July, Adani Energy Solutions ₹8,373 crore QIP in July, and Samvardhana Motherson International’s ₹6,438 crore fundraise in September were top three QIPs in H1FY25.