After a robust 2009, India Inc start '10 with Rs 5,800 cr QIPs

After robust 2009, wherein funds garnered via the Qualified Institutional Placements (QIP) route touched a record Rs 41,522 crore, India Inc seem keen to start this year too on an earnest note. Most companies prefer the QIP route as it cheaper and quickest route with minimum disclosures. There's no lock-in and the whole process takes little time.

As many as five companies are lined up to collectively raise Rs 5,311 crore in the next few days. Five companies, including two banks, Yes Bank and Karnataka Bank, Electrosteel Castings, HDIL and Shriram Transport Finance are the ones. Meanwhile, Usha Martin closed its QIP issues on Monday, mobilised Rs 468 crore, thus total this year's tally to Rs 5,779 crore.

On comparative basis, 2008 was quite a lacklustre year with just Rs 4,111 crore mobilised during the entire year. The prime reason for this was the bearish secondary market amid the global meltdown, which saw stock prices fall to record levels. However, things changed from March 2009, as bullishness crept in, India Inc too grew confident and rising share prices saw them garner money with ease. As a result of which, Fifty-one companies collectively raised record Rs 41,522 crore, against Rs 4,111 crore funds mobilized by nine firms in 2008.
 
Again in December 2009, things had slowed down a bit as only four companies collectively raised Rs 594 crore via QIP route, as compared to more than Rs 4,500 crore mobilised between July and November. The slowdown was a counter effect of a slew of IPOs, including major Power IPOs, in the October-December period, which sucked up inflows from the institutional investors. 

However, Indian companies are once again active to raise the funds from institutional investors though QIPs. The improvement in investor sentiment and market valuations has seen a host of companies announcing fund raising plans. Many of these companies raised funds for expansion of business, funding new project, repay debts and enhance the capital adequacy ratio.

Promoters are just timing the good market apetite to make a killing... a scary sign. Only a few are genuine going for capex/ debenture reduction, said Kamlesh Kotak, head research, Asian Markets Securities. 
 
Karnataka Bank, Yes Bank and Shriram Transport Finance opened QIP books on Wednesday night. Karnataka Bank fixed floor price of Rs 132.75 for its Rs 500 crore QIP issue. The company will use the QIP proceeds to enhance the capital adequacy ratio.
 
Yes Bank fixed its floor price of Rs 269.46, and plans to raise Rs 1,141 crore. Shriram Transport Finance to raise Rs 1,000 crore, with floor price of Rs 501 per share. HDIL is proposed to raise Rs 2,070 crore. Electrosteel Castings proposed to raise Rs 600 crore composite QIP issue consists of placement of equity shares and non-convertible debentures (NCDs) with warrants.

In fact, as many as more than 100 companies are planning to raise around Rs 1,00,000 crore through QIP issues.