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Last Updated : Jun 12, 2017 11:54 AM IST

SBI issue could help QIPs enjoy a record breaking year

Due to the large issues from banks, Qualified institutional placements (QIP) has crossed Rs 31,000 crore already since January.

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Large issues by banks have pushed the value of qualified institutional placements (QIP) in just six months since January to over Rs 31,000 crore compared to Rs 31,684 crore for the full year 2014.

Prime Database, a leading market tracker, says 13 companies managed to raise Rs31,406 crore through QIPs in less than six months.

QIP is a tool used by listed companies to raise capital from its domestic markets by selling securities - shares, debentures or any securities convertible into stocks. The listed companies are not required to submit any pre-issue filings.

“QIPs are a bull market phenomenon. In a depressed market, you will hardly see QIPs, but in a bull market, when the markets are seeing new highs, you will definitely see high activity. It is a very good time for issuers,” Prithvi Haldea, Chairman of Prime Database group, told Mint.

The QIPs surge is driven by large offerings by State Bank of India which raised Rs 15,000 crore last week in the largest QIP in the country. Similarly, the largest QIP by a private sector bank was launched by Kotak Mahindra Bank which raised Rs 5,803 crore.

Experts told Mint investors who are convinced about financial services being the key recipient of the economy's growth and believe India's political stability is here to stay, are investing in bank QIPs.

On the other hand, the issuers are keen to replenish capital on their balance sheets.

"Valuations of many private sector banks is at a cyclical peak which helps them raise capital with limited equity dilution,"  Munish Aggarwal, director at investment bank Equirus Capital, told Mint.

Experts also pointed out that flows from both FPI (foreign portfolio investors) and DII (domestic institutional investor) have revived this year for the first time since the Lehman crisis. According to Kotak Capital Co. flows may together touch USD 30 billion.
First Published on Jun 12, 2017 11:54 am
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