Indian firms take QIP route to raise Rs1,50,000 core
22 Dec 2009
India Inc has been on a roll even as companies in the west have been seeking bailout funds from governments and the fact was underlined with Indian corporates raising over Rs150,000 crore for expansion from investors across the world in 2009.
As much as two-thirds of the corpus has come from overseas investors where markets had been left in shambles by the downturn and where companies desperately short of capital were forced to approach their respective governments for funds to keep them afloat.
Also Indian companies preferred to take the quickfire QIP route to raise the capital they needed for their immediate use rather than the time consuming IPO route. With this they were able to raise funds during 2009 in amounts more of less equal to the pre-downturn 2008 levels.
In all about 50 companies were able to raise a staggering cumulative amount of Rs55,000 crore through sale of shares to qualified institutional investors, most of them overseas-based private equity firms as also from local and foreign financial services firms like banks, insurers and fund houses.
According to market analysts, the QIP route helps institutional investors get a company's shares at a discount to the market price and additionally helps them save on the transaction cost. They say since there was no lock-in period returns were higher.
They add that most of the companies that raise money through QIP want to repay debt and fund capital expansion.
