The Qip Windfall ; As Stock Markets Soar, India Inc. Has Found a Slick Way to Raise Capital On the Double. But a Few Dodgy Promoters May Join the Party.

Summary

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Rs 37,000 crore and counting. As a new-look Business Today went to press, that was the amount a swarm of Indian companies was gearing up to raise via qualified institutional placements (QIPs). A QIP is a capitalraising instrument that allows companies to place securities (other than equity shares they could also be debentures that are fully or partly-convertible into equity) with institutions. The cue: The stock market's buoyancy, with the benchmark index up 24 per cent since the results of the General Elections were announced.

So, why are promoters gravitating towards QIPs, and not more conventional means of financing like initial public offerings (IPOs) or rights issues? Very simply, QIPs are a quick way of raising funds, relatively hassle-free and in-volves fewer regulatory requirements. For instance, such placements do not call for pre- issue filings with the market regulator, as is the case with IPOs and rights issues. QIP gets you money faster, avers Parvez Umrigar, Managing Director, Gammon Infrastructure Projects. Political stability has enthused the market and helps companies to raise funds, he adds. The Mumbai-headquartered project developer hopes to get a good price, now that his stock is up 207.5 per cent from its March low.

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The Qip Windfall ; As Stock Markets Soar, India Inc. Has Found a Slick Way to Raise Capital On the Double. But a Few Dodgy Promoters May Join the Party.

The QIP window, which opened up in 2006, is, indeed, manna from heaven for liquidity-starved promoters of India...

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