Spate of QIP issues likely as Sebi revises pricing formula

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Press Trust of India Posted: Aug 16, 2008 at 0052 hrs IST

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Mumbai, August 15 : A revision in the pricing formula announced by market regulator SEBI is expected to result in a spate of private placement issues in the coming months, according to investment bankers.

A large number of QIPs (issue of shares by listed companies to qualified institutional buyers (QIBs) like banks, insurance firms, mutual funds and foreign funds) could not go through over the last few months due to the 'peculiar pricing' formula prescribed for such issues.

Sebi, after a board meeting early this week, has allowed companies to issue shares to the QIBs based on the average price of last two weeks preceding the relevant date. As per the earlier formula, the floor price for qualified institutional placements would be the average price of shares during the two weeks or six weeks preceding the relevant date which-ever was higher.

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