QIP is nothing but a method to raise funds by a company. Whenever companies need money/capital for any reason, they can go for either an IPO (Initial public offering), or FPO (Follow-on public offering), or Rights issue or Qualified Institutional Placement. QIP is relatively easier process to raise the funds.

Some key points to understand the QIP

  1. Retail investors cannot apply but there are many QIBs (Qualified Institutional Buyers) who can apply for the QIP. QIBs are relatively secure, more regulated and a ready source of funds for the companies for faster raising process.
  2. Price is calculated as an average of last six months of trading.
  3. Qualified institutional placement is considered as a positive thing for the company and the investors because it leads to increase in cash flow/debt reduction/capacity expansion.
  4. Buyers are qualified and regulated so their investment in a company raises confidence of the retail investors too.

For education purpose only. The views are personal. The investments discussed or recommended in the market analysis, research reports, etc. may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and only after consulting such independent advisors as may be necessary. We are not a registered financial advisor or research analyst.

Share:

author

Leave a Reply

Your email address will not be published. Required fields are marked *