Recently we heard the news of Yes bank raising money via QIP, so what are QIPs and what is the need of these QIP or why companies go for QIP, its effects on share price....
First What is QIP ?
QIP is a tool of capital raising through which Indian listed companies can raise capital from domestic market without any requirement of submitting any pre-issue filings to SEBI.
QIP is made to QIB (Qualified Institutional Buyer) who are generally Public Financial Institutions, schedule commercial banks, mutual funds, insurance companies etc.
Why companies go for QIP??
As stated above it is one of the most effective way since issuing company does not have to undergo elaborate procedural requirements to raise the capital.
Now effects of QIP on share price of the company....
Usually when company comes with QIP lot depends upon the price at which private placements are done. If the company is making QIP at heavy discount then it reflects that it's demand is low.
In 2015 almost 13-15 Companies have issued shares through QIP at discount, All trading below issue prices.
Yes bank latest QIP was oversubscribed and final pricing is likely to be Rs 1500 and it rose 2 % .
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