Fund raising via QIP hit a 3-month low in July: Sebi

Amid sluggish market conditions, fund raising by Indian companies through issue of shares to institutional investors hit a three-month low of Rs 918 crore in July.

According to the latest data available with the market regulator Securities and Exchange Board of India (Sebi), funds garnered by companies declined to Rs 918 crore through qualified institutional placement (QIP) route in July from Rs 1,066 crore mopped up in the preceding month.

With the latest fund mop-up, the total capital raised via QIP has reached Rs 12,354 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 July 2013, there were two QIP issues worth Rs 918 crore in the market as compared to two QIP issues worth Rs 1,066 crore in June 2013. The cumulative amount mobilised through QIP route during 2013-14 stood at Rs 5,203 crore through 13 issues," Sebi said.

Market experts said that fund raising through QIPs has slowed down in July 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 about 232 points or 1.2 per cent 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 market's fortunes. In 2010-11, Indian firms garnered Rs 25,850 crore cumulatively through 59 issues via QIP route.