Posts Tagged ‘QIP issue’

Corporate India Mobilized Rs 21k crore through Share Sale :)

India Inc has mobilised over Rs 21,000 crore through share sale to institutional investors in the past six months

India Inc has mobilised over Rs 21,000 crore through share sale to institutional investors in the past six months

India Inc has mobilized over Rs 21,000 crore through share sale to institutional investors in the past six months, which is nearly half the amount proposed to be raised by these companies.

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According to data compiled by SMC Capital, during the period starting March 2009, Indian corporates raised about Rs 21,377 crore through 29 Qualified Institutional Placement (QIP) issuances.

“The companies are preparing for a second round of institutional placement.

The firms which have not raised the amount they had proposed initially is most likely to launch another QIP issue,” SMC Capital Equity Head Jagannadham Thunuguntla said.

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Despite the fact that Indian corporates were quite aggressive in QIP fund raising in the past six months, on an average they raised only 48.63 per cent of the amount approved by their board or shareholders, he said.

Early this year, India Inc announced intentions for raising funds through QIP, as all possible sources of fund raising dried up.

Of the total fund raised thorough the QIP route in the past six months, over Rs 10,300 crore, comprising nearly half of the total amount raised, has been mobilised by the cash-starved real estate companies, including DLF, Unitech and Indiabulls Real estate.

44,000 Crores to be Raised by Indian Firms :)

Indian-corporates-raise-44k crores

Indian corporates raised Rs 21,691 crore through the qualified institutional placement (QIP) route during the first half of this fiscal and the funds raised through this route are expected to double in the second half.

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Mr Jagannadham Thunuguntla, the equity head of SMC Capital, said: “As of now, about 48 companies have received requisite resolutions from either shareholders or their boards to raise the funds through QIP route. The total amount proposed to be raised by these companies is about Rs 44,000 crore.”

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He further said: “As there is no requirement for the approval of the Securities and Exchange Board of India (Sebi) for the QIP issuance. These companies are ready to offer their QIP whenever they are confident about the market conditions.”

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“Some of the prominent names of the corporates that would be raising funds through this route include Tech Mahindra, Essar Oil, Hindalco, RCom, Omaxe, Pantaloon Retail, Jet Airways, Ansal, JSW Steel and L&T,” he said.

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It seems that the Indian promoters have regained their confidence and enthusiasm for fund raising, he added.

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It is turning out that corporates are raising funds through QIP route as a last alternative and not as a preference.

Most of the IPOs launched in the last seven to eight months had put up a flop show.

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The bank funds that are another source of funding are not available for most of the corporates.

Depending upon the sector and profile, banks are asking for premium over interest rates and for smaller companies, banks are not offering loans.

So the corporates that are looking for the expansions would opt for the QIP route to raise the funds, Mr Thunuguntla added.

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Positive Returns keeps Investor Interest in QIPs, Intact :)

QIPs

Thanks to a strong broad market rally, the share prices of the companies that have raised money through qualified institutional placements (QIPs) have recovered.

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According to SMC Capitals, of the 24 companies, which raised money through QIPs, only five gave negative return while the remaining 19 stocks were trading well above their QIP issue prices.

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However, they have underperformed the BSE benchmark index.

As against 62 per cent return posted by the BSE Sensex (since the beginning of the current fiscal), the companies’ return stood at just 35 per cent.

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β€œOn an aggregate, the current mark-to-market (MTM) value of all QIPs put together works out to an amount of Rs 23,208 crore, marking current MTM return of 35.17 per cent,” said a SMC Capitals study.

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β€œThe biggest contributor to the positive performance is the first QIP issuance by Unitech. The issuance was made at Rs 38.5 a share and the current market price is Rs 113.4, indicating a current MTM return of 194 per cent,” the report said.

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Other prominent QIP issuances include Indiabulls Real Estate, Shree Renuka Sugars, HDIL and Emami.

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A day before, the share prices of Network 18 Fincap, Bajaj Hindustan, and REI Agro were trading below their QIP issue prices.

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Such positive returns will make sure that investor interest in QIPs will continue and many more companies will raise fund through this route, said Mr Jagannadham Thunuguntla, Head of Equities at SMC Capitals.

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