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    Qualified Institutional Placement: Presented by - Sandeep Singh 09-II-247 Shyamu Pandey 09-II-250

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    QIP allows listed companies in India to privately place securities like equity shares or convertible debentures to qualified institutional buyers. It was introduced by SEBI to encourage companies to raise funds domestically rather than through foreign capital sources like ADRs. Only specified large financial institutions can participate in a QIP placement. Companies benefit from QIP through faster fundraising, fewer regulatory requirements, lower costs compared to other methods, and no lock-in period for investors.

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    Qualified Institutional Placement: Presented by - Sandeep Singh 09-II-247 Shyamu Pandey 09-II-250

    Uploaded by

    sandeep-bhatia-911
    166 views11 pages
    QIP allows listed companies in India to privately place securities like equity shares or convertible debentures to qualified institutional buyers. It was introduced by SEBI to encourage companies to raise funds domestically rather than through foreign capital sources like ADRs. Only specified large financial institutions can participate in a QIP placement. Companies benefit from QIP through faster fundraising, fewer regulatory requirements, lower costs compared to other methods, and no lock-in period for investors.

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    Presentation1 QIP

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    QIP allows listed companies in India to privately place securities like equity shares or convertible debentures to qualified institutional buyers. It was introduced by SEBI to encourage companies to raise funds domestically rather than through foreign capital sources like ADRs. Only specified large financial institutions can participate in a QIP placement. Companies benefit from QIP through faster fundraising, fewer regulatory requirements, lower costs compared to other methods, and no lock-in period for investors.

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    166 views11 pages

    Qualified Institutional Placement: Presented by - Sandeep Singh 09-II-247 Shyamu Pandey 09-II-250

    Uploaded by

    sandeep-bhatia-911
    QIP allows listed companies in India to privately place securities like equity shares or convertible debentures to qualified institutional buyers. It was introduced by SEBI to encourage companies to raise funds domestically rather than through foreign capital sources like ADRs. Only specified large financial institutions can participate in a QIP placement. Companies benefit from QIP through faster fundraising, fewer regulatory requirements, lower costs compared to other methods, and no lock-in period for investors.

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    of 11

    Qualified Institutional Placement

    (QIP)
    Presented by -Sandeep Singh 09-II-247
    Shyamu Pandey 09-II-250
    Introduction
    Qualified institutional placement (QIP) is a capital raising
    tool, primarily used in India, whereby a listed company can
    issue equity shares, fully and partly convertible debentures,
    or any securities other than warrants which are convertible
    to equity shares to a Qualified Institutional Buyer (QIB).
    Apart from preferential allotment, this is the only other
    speedy method of private placement where by a listed
    company can issue shares or convertible securities to a
    select group of persons.
    QIP scores over other methods because the issuing firm does
    not have to undergo elaborate procedural requirements to
    raise this capital.
    Why was it introduced?
     The Securities and Exchange Board of India (SEBI) introduced the
    QIP process through a circular issued on May 8, 2006, to prevent
    listed companies in India from developing an excessive
    dependence on foreign capital. Prior to the innovation of the
    qualified institutional placement, there was concern from Indian
    market regulators and authorities that Indian companies were
    accessing international funding via issuing securities, such as
    American depository receipts (ADRs), in outside markets.
     The complications associated with raising capital in the domestic
    markets had led many companies to look at tapping the overseas
    markets. This was seen as an undesirable export of the domestic
    equity market, so the QIP guidelines were introduced to encourage
    Indian companies to raise funds domestically instead of tapping
    overseas markets.
     Guidelines for “Qualified Institutions Placement”
    Issuer: A company whose equity shares are listed on a stock exchange  having nation
    wide trading terminals and which is complying with the prescribed requirements of
    minimum public shareholding of the listing agreement will be eligible to raise funds in
    domestic market by placing securities with Qualified Institutional Buyers (QIBs).
    Securities: Securities which can be issued through QIP are equity shares or any
    securities other than warrants, which are convertible into or exchangeable with equity
    shares.
    Investors / Allottees: The specified securities can be issued only to Qualified
    Institutional Buyers (QIBs), as defined under sub-clause (v) of clause 2.2.2B of the
    SEBI (DIP) Guidelines. Such QIBs shall not be promoters or related to promoters of the
    issuer, either directly or indirectly. Each placement of the specified securities issued
    through QIP shall be on private placement basis, in compliance with the requirements of
    first proviso to clause (a) of sub-section (3) of Section 67 of the Companies Act, 1956. A
    minimum of 10% of the securities in each placement shall be allotted to Mutual Funds.
    For each placement, there shall be at least two allottees for an issue of size up to Rs.250
    crores and at least five allottees for an issue size in excess of Rs.250 crores. Further, no
    single allottee shall be allotted in excess of 50 per cent of the issue size. Investors shall
    not be allowed to withdraw their bids / applications after closure of the issue.
    Cont…
    Issue Size: The aggregate funds that can be raised through QIPs in one
    financial year shall not exceed five times of the net worth of the issuer
    at the end of its previous financial year.
    Placement Document: Issuer shall prepare a placement document
    containing all the relevant and material disclosures. There will be no
    pre-issue filing of the placement document with SEBI. The placement
    document will be placed on the websites of the Stock Exchanges and
    the issuer, with appropriate disclaimer to the effect that the placement
    is meant only for QIBs on private placement basis and is not an offer to
    the public.
    Pricing: The floor price of the specified securities shall be determined
    on a basis similar to that for GDR / FCCB issues and shall be subject
    to adjustment in case of corporate actions such as stock splits, rights
    issue, bonus issue etc.
    Cont..
    Other procedural requirements: The resolution approving QIP, passed under
    sub-section (1A) of Section 81 of the Companies Act, 1956 or any other
    applicable provision, will remain valid for a period of twelve months from the
    date of passing of the resolution. There shall be a gap of at least six months
    between each placement in case of multiple placements of specified securities
    pursuant to authority of the same shareholders’ resolution. Issuer and Merchant
    Banker shall submit documents / undertakings, if any, specified in this regard in
    the listing agreement, for the purpose of seeking in-principle approval and final
    permission from Stock Exchanges for listing of the specified securities.
    Involvement of Merchant Banker: QIP shall be managed by a SEBI
    registered merchant banker who shall exercise due diligence and furnish a due
    diligence certificate to Stock Exchanges stating that the issue complies with all
    the relevant requirements. The merchant banker shall file a copy of the
    placement document and post issue details with SEBI within thirty days of the
    allotment, for record purpose.
    Who can participate in the issue?
    The specified securities can be issued only to
    QIBs, who shall not be promoters or related to
    promoters of the issuer. The issue is managed by a
    Sebi-registered merchant banker. There is no pre-
    issue filing of the placement document with Sebi.
    The placement document is placed on the websites
    of the stock exchanges and the issuer, with
    appropriate disclaimer to the effect that the
    placement is meant only for QIBs on private
    placement basis and is not an offer to the public.
    Qualified Institutional Buyers
    Qualified Institutional Buyers (QIBs) those
    institutional investors who are generally perceived
    to possess expertise and the financial muscle to
    evaluate and invest in the capital markets.
    Qualified Institutional Buyer’ shall mean: a)
    Public financial institution as defined in section 4A
    of the Companies Act, 1956; b) Scheduled
    commercial banks; c) Mutual Funds;
    Qualified Institutional Buyers
     Foreign institutional investor registered with
    SEBI; e) Multilateral and bilateral development
    financial institutions; f) Venture Capital funds
    registered with SEBI. g) Foreign Venture Capital
    investors registered with SEBI. h) State Industrial
    Development Corporations. i) Insurance
    Companies registered with the Insurance
    Regulatory and Development Authority (IRDA).
    Benefits of Qualified Institutional
    Placements
    Time Saving

    Rules & Regulations

    Cost Efficient

    Lock-In
    END

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