QIP fundraising shines, cos garner Rs 50,200 crore in 2023

Fundraising through the issuance of shares to institutional investors skyrocketed, as companies raked in Rs 50,218 crore in 2023, marking a six-fold surge from the previous year and indicating a positive outlook among investors.

Apart from QIPs, fund mobilisation through rights issue of shares and OFS (Offer-for-Sale) route too surged in 2023, as compared to last year.

Market experts attributed the primary reason for the increase in Qualified Institutional Placement (QIP) fundraising to the market and investor sentiments that play an important role in their success.

As long as positive market vibes persist, and investors continue to reap returns, listed companies lean towards opting for fundraising through QIP as this avenue ensures swift access to funds, they added.

According to data by the National Stock Exchange (NSE), companies collected Rs 50,218 crore through QIPs in 2023, which was way higher than Rs 8,196 crore raised in the preceding year.

Bajaj Finance Ltd spearheaded the largest QIP, securing about Rs 8,800 crore. Following suit, Union Bank of India and Bank of India raised around Rs 5,000 crore and Rs 4,500 crore, respectively.

In addition, there was one QIP of a REIT of Brookfield India Real Estate Trust that garnered Rs 2,305 crore this year.

Other noteworthy contributors to the fundraising spree included Cholamandalam Investment & Finance, Federal Bank, IDFC First Bank, Aditya Birla Capital and Bank of Maharashtra.

Listed companies that need funds either to meet their capex requirements or to comply with Sebi's 25 per cent minimum public shareholding norms generally opt to raise funds through the QIP route.

Further, as compared to rights issues or follow-on public offers (FPOs), the QIP route takes less time and fewer compliance norms.

QIP is one of the quickest products to raise funds from institutional investors. It is designed only for the listed companies, which allows them to mobilize funds quickly from institutional investors without the need to submit any pre-issue filings to market regulators.

The NSE data indicates a substantial rise in capital raised through rights issue route, reaching Rs 8,017 crore this year compared to Rs 3,646 crore in 2022. Furthermore, fund mobilization through the OFS route increased 44 per cent to Rs 15,959 crore in 2023, up from Rs 11,110 crore in the previous year.