In 2024, the markets have seen many highs and record-breaking figures until now, and one of the most promising of these is the exponential amounts raised by Qualified Institutional Placements (QIPs). QIP fundraising surpassed ₹ 1 lakh crore mark in this calendar year for the first time. In 2024, until now, 82 companies have raised funds through QIPs, which is nearly ₹ 1.23 lakh crore.
IPO vs. QIPs
QIPs not only raised the bar high with its exponential fundraising this year, but it is almost at par with the IPOs when compared on the basis of funds raised. While through QIPs, ₹ 1.23 lakh crore has been raised from 82 companies, IPOs on the other hand raised ₹ 1.34 lakh crore from 76 companies’ issues.
Moreover, the market participants were actually expecting QIPs to surpass IPO fundraising in 2024, however, IPOs until now are ahead in the game but the margin being so narrow, it can turn around anytime.
Growth of QIPs
The growth of QIPs has been phenomenal and inevitable as in the past two years only it grew significantly. In 2022, only 14 companies went for qualified institutional placement raising around ₹ 11743 crore, which grew more than 4 times in 2023 to ₹ 52350 crore and that has again doubled this year to ₹ 1.23 lakh crore.
It was last in 2020, when through QIPs ₹ 80816.24 crore was raised. Post covid, the fundraising slowed down via QIPs, dropping to one of the lowest in 2022, but this year’s funds have surpassed the pre-COVID QIP investments as well.
Notable QIPs in 2024
The biggest QIPs in 2024 include both Zomato and Vedanta, which rose around ₹ 8500 crore each. The next on the list has been Adani Energy Solutions which rose ₹ 8373 crore, followed by Varun Beverages raising ₹ 7500 crore.
Amongst other significant QIPs in 2024, Samvardhana Motherson comes at the top with a fundraising of ₹ 6438 crore and Godrej Properties with ₹ 6000 crore. Apart from these, there are other three big QIP fundraising each of ₹ 5000 crore which are of JSW Energy, Punjab National Bank, and Prestige Estates Projects.
Why QIP fundraising is on the rise?
The surge in fundraising via QIPs is on the rise mainly owing to the positive market sentiments and the constant flow of capital into the market from both domestic institutional investors, as well as retail investors. These consistent inflows indicate the demand for assets to invest in the market and at the same time offer the large companies an alternative source of capital.
That said, this current trend of fund raising whether via QIP or IPO can be concerning as well if the management of the companies raising the funds cannot make use of the same prudently. Any mismanagement of these funds can lead to overpriced markets, which in turn will adversely affect the investors in the long term.
Wrapping up
The growing economy is paving the way for a rising inflow of funds in the market and vice versa, however, the companies need to be efficient and prudent enough to use these funds to grow the businesses for the long-term benefit of themselves and the investors.
Source: MoneyControl
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