India’s thriving stock market has driven many listed companies to turn to Qualified Institutional Placements (QIPs) to raise capital. While experts believe this positive market trend will continue, some remain cautious.
Looking ahead, Indian companies are expected to raise even more funds through QIPs this year to support capital-intensive projects, which could play a crucial role in strengthening the economy. In fact, data from the Prime Database shows that 27 companies secured board approvals for QIP fundraising just last month.
The Surge of QIPs in 2024
As of December 28, 2024, Indian companies raised ₹1,37,560 crore through 95 QIPs, a sharp increase from ₹54,350 crore raised across 45 issues the previous year, according to Prime Database.
Source: Mint
In the past month, 27 companies obtained board approvals to raise funds via QIPs. Additionally, the data shows that firms like Shakti Pumps India Ltd and Azad Engineering Ltd are anticipated to receive board approvals for QIPs in the near future.
Source: Mint
However, despite record QIP fundraising in 2024, private investment in new ventures has been slow to gain momentum.
Understanding Qualified Institutional Placements (QIPs)
A Qualified Institutional Placement (QIP) is a way for publicly listed companies to raise capital by offering shares or other securities to Qualified Institutional Buyers (QIBs). It’s a quicker and simpler option compared to traditional methods like Follow-on Public Offers (FPOs) or Rights Issues, as it has fewer regulatory requirements and faster execution.
Factors Fueling the QIP Boom
Several elements have contributed to the heightened activity in QIPs:
- Favorable Market Conditions: India’s robust bull market has created an environment conducive to fundraising, with strong liquidity and investor interest.
- Regulatory Efficiency: QIPs offer a more straightforward regulatory process compared to other fundraising methods, making them an attractive option for companies seeking quick capital infusion.
- Strategic Financial Planning: Firms are leveraging QIPs to fund growth initiatives, reduce debt, and pursue strategic projects such as capacity expansion, acquisitions, and technological upgrades.
- Sectors Driving the Boom: Sectors like banking, financial services and insurance (BFSI), real estate, healthcare, consumer durables, information technology (IT), and industrials are expected to lead QIP activity this year, according to industry experts.
Major QIP Transactions in 2024
Several high-profile QIP transactions marked 2024. Vedanta Ltd and Zomato Ltd each raised ₹8,500 crore, while Adani Energy Solutions Ltd secured ₹8,373 crore. Varun Beverages Ltd completed a ₹7,500 crore share placement.
Other significant QIPs included JSW Energy Ltd, Prestige Estates Projects Ltd, and Punjab National Bank, each raising ₹5,000 crore. In November, Godrej Properties Ltd launched a ₹6,000 crore QIP, and fintech firm Zaggle Prepaid Ocean Services Ltd raised ₹594.84 crore just last week.
Source: Mint
Top 10 QIPs by Issue Amount – 2024
| Company | Opening Date | Amount (in Rs. Crore) |
| Vedanta | 15 Jul 2024 | 8,500 |
| Zomato | 25 Nov 2024 | 8,500 |
| Adani Energy Solutions | 30 Jul 2024 | 8,373 |
| Varun Beverages | 13 Nov 2024 | 7,500 |
| Samvardhana Motherson International | 16 Sep 2024 | 6,438 |
| Godrej Properties | 27 Nov 2024 | 6,000 |
| JSW Energy | 02 April 2024 | 5,000 |
| Prestige Estates Projects | 29 Aug 2024 | 5,000 |
| Punjab National Bank | 23 Sep 2024 | 5,000 |
| Adani Enterprises | 09 Oct 2024 | 4,200 |
Source: Mint
Market Optimism with a Touch of Caution
While many experts remain optimistic about the stock market’s performance in 2025, expectations are more measured. According to experts, the exceptional returns seen during the post-COVID recovery may not be replicated, but a reasonable 13-15% return on major indices is achievable.
Challenges Loom Despite Strong Performance
India’s stock market has experienced consistent growth over the past five years, but factors like rising US bond yields and the risk of slower domestic corporate earnings could impact performance in 2025. In September 2024, both the Nifty 50 and Sensex reached record highs. However, with foreign investors turning net sellers, the indices pared gains, ultimately closing the year with a modest 10% increase.
Source: Mint
Startup QIPs and IPOs Poised for Growth
Qualified Institutional Placements (QIPs) by startups and new-age economy companies have been limited so far, with only a few notable instances like MapMyIndia’s ₹500 crore QIP in 2023. However, market experts predict an increase in such activity as more startups looking to enter the public markets.
A Surge in Startup IPOs
In 2023, around a dozen startups went public through initial public offerings (IPOs). Key players like Ola Electric Mobility Ltd, Swiggy Ltd, FirstCry (Brainbees Solutions Ltd), Ixigo (Le Travenues Technology Ltd), Unicommerce eSolutions Ltd, and Blackbuck (Zinka Logistics Solutions Ltd) made their debut in the stock market. This trend reflects the growing confidence of startups in leveraging public markets for capital expansion.
Record IPO Fundraising in 2024
India saw record-breaking IPO activity in 2024, with investors purchasing ₹1.34 trillion worth of shares, surpassing the previous high of ₹1.19 trillion raised in 2021. Experts foresee more startups accessing public markets earlier in their growth cycle, driven by favorable market conditions and increasing investor interest.
Easing monetary policies globally and ample liquidity are expected to further drive investor enthusiasm. The rapid growth in demat accounts—rising to 179 million—signals a surge in retail investor participation, which could fuel even more listings in the coming year.
Strong IPO Pipeline for 2025
Looking ahead to 2025, 34 companies have already obtained approval from the Securities and Exchange Board of India (SEBI) to launch IPOs, targeting a combined ₹41,462 crore. Additionally, 55 companies are awaiting regulatory clearance to raise approximately ₹98,672 crore.
Source: Mint
Sectoral Growth and Favorable Conditions
High-growth sectors like technology, renewable energy, and consumer goods are expected to dominate the IPO landscape. Supportive market conditions, improved regulations, and increased activity in these sectors will continue to propel the IPO momentum.
Record QIP Fundraising Expected in 2025
Experts believe that QIP fundraising will break new records this year as companies look for more flexible capital-raising options. QIPs enable firms to raise funds at prices close to market value, providing a cost-effective mechanism for capital access. Institutional investors are likely to maintain high participation, supported by easing monetary policies and attractive market valuations.
Implications for Private Capital Expenditure
Despite record QIP fundraising in 2024, private capital spending has been slow. While companies are raising funds, they haven’t invested as much in major projects. As a result, the government has increased infrastructure spending to make up for the lack of private investment.
Source: Mint
Will the QIP Momentum Sustain?
Market experts anticipate that the momentum in QIP fundraising will continue into 2025, driven by:
- Ongoing Market Optimism: The positive trajectory of India’s stock markets is expected to persist, fostering a conducive environment for further QIP activities.
- Corporate Growth Strategies: Companies are likely to continue utilizing QIPs to finance expansion plans, reduce leverage, and invest in new technologies.
- Investor Appetite: The sustained interest from institutional investors in equity markets is poised to support future QIP issuances.
Conclusion
The surge in QIPs during 2024 underscores a significant shift in how Indian companies are approaching capital raising, favoring the efficiency and flexibility that QIPs offer. As we move into 2025, it will be crucial to monitor whether this trend translates into increased private capital expenditure, thereby contributing to broader economic growth and development.
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FAQ
What are QIPs?
QIPs (Qualified Institutional Placements) allow Indian companies to raise capital by issuing securities directly to qualified institutional buyers like mutual funds, insurance companies, and banks.
Why did QIPs boom in 2024?
2024 witnessed a surge in QIP issuances primarily driven by companies seeking to expand operations, fund acquisitions, and reduce debt.
What factors contributed to the record-breaking QIP numbers?
A robust economic recovery, improving corporate earnings, and a favorable regulatory environment all contributed to the QIP boom.
Can the QIP momentum be sustained in 2025?
Sustaining the momentum will depend on factors like economic growth, interest rate trends, and investor sentiment.
What are the potential challenges for QIPs in 2025?
Potential challenges include rising interest rates, geopolitical uncertainties, and increased competition from other fundraising options.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
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