India Inc on fund raising spree, 36 QIPs to raise Rs 80,000 crore approved in last 30 days

Experts say the sudden rush is due to a combination of factors, including improved market conditions and stable economic outlook, as companies look to scale up and fund their growth ambitions.

There has been a sudden rush among companies to raise funds through qualified institutional placement route, or QIPs, with three dozen firms seeing their boards clear fund raise resolutions in the past one month alone, cumulatively amounting to over Rs 80,000 crore, as per Prime Database.

If one considers just the number of trading sessions in April, then one QIP resolution was getting cleared each day.

More importantly, it is not just that mid and small-sized companies or the so called ‘side counters’ that are looking at fund raising, but the list includes larger listed players as well. Big names like Biocon, Lloyds Metals, Adani Enterprises, State Bank of India, Hindustan Construction, Infibeam Avenues, JSW Energy, Omaxe, and Torrent Pharmaceuticals, among others have tapped the QIP route for fund raise in the last one month.

The board of Adani Enterprises approved fund raising worth Rs 15,000 crore, while the board of SBI has approved a resolution for Rs 25,000 crore. JSW Energy too will look to raise funds up to Rs 10,000 crore. Aside of the larger ones, there are many companies looking to raise funds in excess of Rs 1,000 crore.

Experts say the sudden rush is due to a combination of factors, including improved market conditions and stable economic outlook, as companies look to scale up and fund their growth ambitions.

Among the various avenues to raise funds, QIP has been one of the quickest and easiest to execute, they added. “Given the current market condition and sentiment, QIP is one of the best ways to raise capital. Both, domestic and foreign investors are bullish on Indian markets are ready to take large chunk of equity,” said Suvajit Ray, Head of Products, IIFL Capital.

“The surge in QIP resolutions is also because companies are looking to scale up and move to the next stage of growth. Another advantage of a QIP is that many times, existing shareholders participate in the offer and the typically invest with a long-term objective. It is a win-win for both the company and the investors,” said Ray.

The trend seems to be holding, as another 28 companies have seen their respective boards clear a fund-raising resolution in the month of May, which has seen only 15 trading sessions so far. In other words, nearly two companies saw a QIP resolution being passed during every trading session this month.

It was also a jump from last month when 20 companies approved a resolution to raise funds through a QIP offering.