QUALIFIED

INSTITUTIONAL
PLACEMENTS.
INTRODUCTION
MEANING
 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).
 Why was it introduced?
 The Securities and Exchange
Board of India (SEBI)
introduced the QIP process to
prevent listed companies in India
from developing an excessive
dependence on foreign capital.
 To encourage Indian companies
to raise funds domestically
instead of tapping overseas
markets.
What are some of the regulations
governing a QIP?
To be able to engage in a QIP company should be
 listed on an exchange which has trading terminals

across the country.

 Have the minimum public shareholding

requirements which are specified in their listing

agreement.
During the process…….
 Issue a minimum of 10% of the securities issued
under the scheme to mutual funds.
 Ensure that there are at least two allottees, if the size
of the issue is up to Rs 250 crore and at least five
incase issue is above Rs 250 crore.
 No individual allottee is allowed to have more than
50% of the total amount issued.
 Also no issue is allowed to a QIB who is related to
the promoters of the company.
QIPs In India
 The SEBI has with effect from May 8, 2006
inserted Chapter XIIIA into the SEBI (Disclosure
& Investor Protection) Guidelines to provide
guidelines for QIPs
 The QIP Scheme is open to investments made by
“Qualified Institutional Buyers”
Who can participate in the issue?
 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.
 No pre-issue filing of the placement document with
Sebi.
 Placement document is placed on the websites of the
stock exchanges and the issuer
 The placement 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’ can be:

 Public financial institutions

 Scheduled commercial banks

 Mutual Funds

 Foreign institutional investor registered with SEBI

 Multilateral and bilateral development financial institutions

 Venture Capital Funds registered with SEBI

 Foreign Venture Capital investors registered with SEBI

 State Industrial Development Corporations

 Insurance Companies registered with the IRDA

 Provident Funds with minimum corpus of Rs.25 crores

 Pension Funds with minimum corpus of Rs. 25 crores

Benefits of Qualified Institutional
Placements
 Time saving
 Lesser rules and regulations
 Cost efficient
 No lock in period
QIP NEWS
RELIANCE MEDIA WORKS

 On Tuesday said it will raise funds up to Rs 500 crore

by private placement of shares with potential investors.
 It received approval from the shareholders to raise up
to Rs 500 crore through QIPs,
 Declared in a filing to the Bombay Stock Exchange.
 Last year, it had passed a similar enabling resolution
for QIP to 25 per cent of the issued/ paid up capital.
 Anil Sekhri ,Gautam Doshi, Ajay Prasad appointed as
Director on the board of the company.
GODREJ PROPERTIES

 Its a part of the $2.5 billion Godrej group.

 Will raise up to Rs 1,000 crore of debt through QIP
in the next 18 to 24 months, said by Group
Chairman Adi Godrej.
 Adi Godrej said the real estate wing of the group is
expected to be its largest revenue generator in the
next five to ten years.
INDIABULLS FINANCIAL
SERVICES

 Its one of India’s leading NBFCs.

 Raised Rs 1,280 crore QIP of non-convertible
debentures and warrants.
 The warrants will entitle the holder to buy shares at
a fixed price on a future date and can be traded
separately from the secured NCDs.
SEBI DIP [DISCLOSURE AND
INVESTOR PROTECTION]
GUIDELINES
i. Definition of “Qualified Institutional Buyers
(QIBs)
(a) Presently, foreign institutional investors (FIIs) registered
with SEBI are included in the definition of QIBs. These
FIIs invest in securities in the primary market, either on
their account or on behalf of their sub-account(s), in terms
of the SEBI (Foreign Institutional Investors) Regulations,
1995. It has been decided to exclude sub-accounts falling in
the categories of “foreign corporate” and “foreign
individual” from the definition of QIBs.
(b) Further, it has been decided to include the definition of
“QIB” in the definition clause of the SEBI (DIP)
Guidelines, for the purpose of clarity.
(ii) Eligibility for making Qualified Institutions
Placement (QIP)
 a) Presently, the eligibility criteria for listed companies desirous of making
QIP include a condition that the equity shares of the same class of such
companies shall have been listed on a stock exchange having nationwide
terminals, for a period of at least one year as on the date of issuance of
notice to shareholders for considering the QIP.

(b) It is noted that companies, which have been listed during the preceding
one year pursuant to approved scheme(s) of merger/ demerger/
arrangement entered into by such companies with companies which have
been listed for more than one year in such stock exchange(s), are not able
to use the QIP route for raising funds. In order to enable such companies to
raise funds through QIP route, it has been decided that for the purpose of
fulfillment of the abovementioned eligibility criterion, such companies may
take into account the listing history of the listed companies with which they
have entered into the approved scheme(s) of merger/ demerger/
arrangement.
(iv) Pricing norms for QIP

 In order to facilitate eligible listed companies to

raise funds through QIP route, it has been decided
to modify the pricing guidelines for QIP by
bringing the issue price of the securities offered
closer to their market price. This has been effected
through change in the floor price formula and
definition of relevant date
(v) Pricing norms for preferential allotment to
QIBs

 In order to facilitate eligible listed companies to

raise funds from QIBs without having to go
through the elaborate documentation process
required for QIP, it has been decided to extend the
modified pricing guidelines of QIP to preferential
allotment to QIBs, provided that the number of
QIB allottees in such preferential allotment does
not exceed five.