With the UPA alliance gaining majority at the Centre and the secondary markets coming in the grip of a collective euphoria, promoters have started looking at the the primary market again for funds. The qualified institutional placement (QIP) route is now buzzing with activity as this route is cheaper and faster for India Inc to mobilise funds. Unitech raised Rs 1,620 crore recently. Indiabulls mopped up over Rs 2,600 crore last week. At least three dozen companies are waiting in the wings to mobilise funds from the market through QIPs. “While it may still be some time before many players hit the IPO market, the QIP route has again become attractive for promoters after the sudden change in market sentiment,” said Prithvi Haldea, chairman and managing director, Prime Database.

While generating funds through an IPO is a long-drawn process, from filing a prospectus with the market regulator to listing of shares, which might take around 2 months, QIPs are a much faster way to garner funds. However, only big institutions are allowed to participate in QIPs. “There are 16 companies which have Sebi’s approval and are waiting to tap the capital market to raise around Rs 5,500 crore. We will see the first set of IPOs by the end of June or early July,” said Haldea.

However, in the intermediate period there are a number of companies who want to raise funds through the QIP route. “With Sebi’s guideline on QIP pricing, of two-weeks’ average price to be considered, this is the right time for promoters to get good valuations. We will see more realty companies raising funds through QIPs,” says Sumit Binani, senior vice president, SREI Capital Markets.

... contd.