Preferential equity issues down by a third

Coincides with increased fund-raising through QIP

Preferential equity issuances have fallen 36% over the last one year as companies explored alternative capital raising avenues. 

The amount of capital companies raised through preferential allotment has come down from Rs 41,376 crore last year to Rs 26,448 crore.

A preferential issue is a process by which companies raise money by selling shares to a select group of investors, rather than to the public at large.

The data is based on statistics from the Securities and Exchange Board of India’s monthly bulletin. It looked at data till November 2014. The previous year’s figures have also been taken till November.

An investment banker pointed out that Qualified Institutional Placements (QIPs) have provided an alternative source of capital in 2014.

Qualified institutional placements were on the rise. Prime Database statistics show that QIPs collected more money in 2014 than the previous three years combined. 
 

A qualified institutional placement is when a company places securities with a select group of institutional investors. The process is relatively quick compared to other fund-raising avenues, and is preferred when the markets are on an uptrend. 

QIPs raised Rs 31,684.22 in 2014. The avenue accounted for between Rs 3,000-8,100 crore in the previous three years.