What is the Full Form of QIP in Share Market?

The QIP Full Form in Share Market is Qualified Institutional Placement. The Indian share market offers companies a diverse range of avenues to raise capital.  One prominent method is the Qualified Institutional Placement (QIP), a mechanism designed to facilitate efficient fundraising from accredited investors. This comprehensive guide explores the intricacies of QIPs, their advantages for companies, and their significance in the Indian capital market ecosystem.

A Tailored Approach

Qualified Institutional Placements (QIPs) allow listed Indian enterprises to raise capital by issuing equity shares, fully and partly convertible debentures, or other convertible securities. QIPs target Qualified Institutional Buyers, unlike public offers. Domestic Mutual Funds, FIIs, Insurance Companies, Pension Funds, and Banks are SEBI-approved QIBs.

Reason for QIP

SEBI launched QIPs in 2006 to strengthen domestic institutional investors and reduce Indian enterprises’ foreign capital dependence.  QIPs ease corporate access to domestic institutional funds, improving price discovery and major transaction execution.

QIP: Easy and Effective

QIP should be quicker and easier than public offerings. The board approves QIP and capital increase.  It appoints investment bank or financial company QIP lead managers. Lead managers check proposed QIBs’ SEBI eligibility. QIBs bid their investment quantity and preferred price to lead managers during “book building” to establish the securities’ issuance price.

Companies Profit from QIPs

QIPs are shorter than public offerings and may generate funds rapidly. Less regulatory hurdles and compliance costs make the process cheaper than public offerings. QIPs allow companies to reach sophisticated investors with large investment capabilities, thereby increasing investments. QIPs may increase a company’s investor reputation, attracting new investments.