India Inc seems to be on a specie heave spree. Recently companies like Hindalco, Bajaj Hindustan Limited, Emami, HREL have gone
for QIPs to rhytidoplasty funds.
According to estimates, only five companies have raised around Rs 8,500 Crore since April 2009, of which 95 per cent of the amount is on account of DLF, Unitech and India bulls very Estate.
Excluding the five companies, thither atomic number 18 39 others that have denote plans to raise a total of Rs 53,900 Crore through the qualified institutional placement (QIP) route (issue of equity, warrants, etc), while a few others are yet to announce pricing details. This is signifi outhouset as compared to the foregoing two years. Like every coin has two sides, the tend to raise funds also has its set of pluses and minuses. Let us now understand the concept called QIP in detail as below.
What is QIP?
Qualified institutional placement (QIP) is a capital raising tool, primarily used in India, whereby a listed company stand 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).
Apart from preferential allotment, this is the bustling method of private placement whereby a listed company can issue shares or convertible securities to a select multitude of persons. Companies going for QIP do not have to undergo rarify procedural requirements to raise this capital.
Why was it introduced?
In order to hinder listed companies in India from developing an excessive dependence on irrelevant capital SEBI introduced the QIP process through a circular issued on May 8, 2006. Prior to the innovation of the qualified institutional placement, there was concern from Indian market regulators and authorities that Indian companies were accessing global funding via issuing securities, such as American down payment receipts (ADRs), in outside markets. The complications associated with...If you want to get a full essay, order it on our website: Orderessay
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