Prospects bright for qualified institutional placements: Report
September 9th, 2009
Mumbai, Sep 9 (IANS) Companies wanting to go the qualified institutional placement (QIP)
route to generate funds will find encouragement in the fact that most earlier ventures have
handed out more than modest returns to investors, according to a report.
“Since March 2009, current mark-to-market (MTM) value of all QIPs put together work out to
an amount of Rs.23,208 crore, marking returns of more than 35 percent,” said a report by leading
brokerage firm SMC Capitals.
“This also means that there will be takers for such issues, if companies come forward with
reasonable valuations,” said SMC Capitals equity head Jagannadham Thunuguntla.
QIP is a capital-raising tool whereby a listed company issues equity shares, fully and partly
convertible debentures or securities other than warrants to institutional buyers. Mark-to-market is
the accounting practice of recording the price or value of a security, portfolio or account to
reflect its current market value rather than its book value. Between March and Sep 7, 24 QIPs
raised about Rs.17,169.92 crore with the first issue from Unitech being the most successful.
Unitech’s QIP, which came in April, has given the highest return to its subscribers – a whopping
177.53 percent. The amount raised by the company was Rs.1,621.10 crore, which is now worth
Rs.4,499.08 crore on MTM valuations. Unitech, in fact, came out with a second QIP, which
again did well. The returns of the second issue at MTM valuation stand around 32 percent.
Only five QIPs are trading below their issue price, SMC said.
“Unitech took a chance by going in for a QIP, when conditions were still uncertain. Since then, a
lot of companies have found QIP to be the flavour of the season,” said Thunuguntla.
Among other prominent QIPs providing more than modest returns are Shree Renuka Sugars
(42.74 percent), Webel-SL Energy (42.73 percent), and Indiabulls Real Estate (38.16 percent).