“Single largest ever equity raise through the QIP route in India’s metals and mining sector by Vedanta”.

In this article we will talk about the what are QIPs , why its more feasible for the listed companies to raise funds through QIPs.

What is QIP (Qualified Institutional Placement)?

A Qualified Institutional Placement (QIP) is a fundraising tool used by publicly listed companies to raise capital by issuing equity shares, fully and partly convertible debentures, or other securities to Qualified Institutional Buyers (QIBs).

QIP is a quick and efficient way for companies to raise funds without going through elaborate regulatory procedures, as is the case with public offerings or rights issues.

Key Features of QIP

1. Target Audience:
   • Securities are only offered to Qualified Institutional Buyers (QIBs) such as mutual funds, banks, insurance companies, pension funds, and foreign institutional investors.
2. Regulations:
   • Governed by the Securities and Exchange Board of India (SEBI) regulations.
   • Helps protect smaller investors since shares are not sold to the general public.
3. Time and Cost Efficiency:
   • Compared to a public offering, a QIP involves fewer legal requirements and regulatory compliances, making it faster and cheaper.
4. Discount and Pricing:
   • Companies may offer securities at a slight discount to market prices but must follow SEBI guidelines regarding pricing.

Benefits of QIP

1. Quick Fundraising:
   • Reduces the time required to raise capital compared to traditional methods like IPOs or rights issues.
2. Lower Regulatory Requirements:
   • Less regulatory scrutiny, as QIP is designed for sophisticated institutional investors.
3. No Shareholder Approval Needed:
   • Companies can raise funds without needing extensive shareholder approval, speeding up the process.
4. Prevents Debt:
   • Allows companies to raise funds without increasing debt, strengthening the balance sheet.

Eligibility Criteria

• Only listed companies on Indian stock exchanges can issue QIPs.
• Securities must be issued to QIBs only.
• QIPs are subject to a lock-in period of 1 year to prevent immediate resale.

QIPs are a fast, efficient, and cost-effective way for companies to raise capital by targeting institutional investors. This method has gained popularity in India as a practical alternative to traditional fundraising methods.In 2024, the largest qualified institutional placements (QIPs) in India were from Zomato and Vedanta, both raising ₹8,500 crore each.