Fund raising via QIP declines 62% to Rs 1066 cr in June: Sebi

Amid sluggish market conditions, fund raising by Indian companies through issue of shares to institutional investors plunged 62% to Rs 1,066 crore in June.

 

According to the latest data available with the market regulator Securities and Exchange Board of India (Sebi), funds garnered by companies declined to Rs 1,066 crore through the QIP route in June after touching a three-month high in May.

 

This was 62% lower than Rs 2,832 crore mopped up in May.

 

With the latest fund mop-up, the total capital raised via qualified institutional placement (QIP) has reached to Rs 11,436 crore since the beginning of 2013.

 

QIP is a capital raising tool whereby a listed firm can issue equity shares, fully and partly convertible debentures, or other securities that are convertible to equity shares to institutional investors.

 

"During June 2013, there were two QIP issues worth Rs 1,066 crore in the market as compared to 5 QIP issues worth Rs 2,832.6 crore in May 2013. The cumulative amount mobilised through QIP route during 2013-14 stood at Rs 4,285 crore through 11 issues," Sebi noted.

 

Market experts said that fund raising through QIPs has slowed down in June due to sluggish market conditions.

 

"Most investors were reluctant to participate in QIPs since shares of many companies that made placements to institutional investors were trading below the issue price. Now, we are witnessing a renewed interest from investors, though a lot would depend on valuations," an expert said.

 

The sharp decline in fund raising via QIP is coincided with a about 365 points or 1.84% plunge in the BSE's benchmark Sensex during the month.

 

In 2012-13, firms garnered nearly Rs.16,000 crore through issuance of shares to institutional investors against Rs 2,163 crore garnered through QIPs in the previous fiscal.

 

The experts had attributed the seven-fold growth to the revival in the stock markets fortunes. In 2010-11, Indian firms garnered Rs 25,850 crore cumulatively through 59 issues via QIP route.