Fundraising via QIP hits Rs 78,000 cr in FY24 on strong market sentiment
New Delhi: Fuelled by improved market sentiments and robust underlying demand, fundraising by issuing shares/units to institutional investors soared to Rs 78,000 crore in 2023-24, a more than seven-fold surge year-on-year.
The 2024-25 fiscal is expected to be very robust as companies will continue to garner capital for capex post-election results.
"In an unprecedented era of economic development aided by pro-business reforms and macroeconomic stability, India is set to become the third largest economy globally by 2027 and will continue to see strong flows.
"In this backdrop, we expect FY25 to also very strong year from a primary capital perspective as companies will continue to look to raise capital for capex post-election results," Neha Agarwal, MD & Head of Equity Capital Markets at JM Financial Ltd, told PTI.
Financial companies raise funds through qualified institutional placement (QIP) to meet their additional capital requirement buffer to support their growth plans and enhance their business.
QIP is one of the quickest products to raise funds from institutional investors. It is designed for the listed firms and investment trusts, which allow them to mobilise funds quickly from institutional investors without the need to submit any pre-issue filings to market regulators.
According to data compiled by Prime Database, fundraising through the QIP route reached Rs 78,089 crore in 2023-24, which was way higher than Rs 10,235 crore mopped up in the preceding financial year. This included fund mobilisation by REITs and infrastructure investment trusts (InVITs) through the QIP mode.
Before that, Rs 28,532 crore was mobilised through the QIP route in 2021-22 and an all-time high of Rs 81,731 crore in 2020-21.
Of Rs 78,089 crore collected in FY24, a total of Rs 68,933 crore was raised by 55 companies through the route, remaining Rs 9,156 crore was mopped up by one REIT and two InvITs.
Brookfield India Real Estate Trust garnered Rs 2,305 crore through QIP, National Highways Infra Trust mopped up Rs 6,181 crore and Grid Trust collected Rs 669 crore through the route.
Market experts attributed the primary reason for the increase in QIP fundraising to the market and investor sentiments that play an important role in their success.
"With improved market sentiments and strong underlying demand, companies looked to raise capital to seize growth opportunities," JM Financial's Agarwal said.
Akshay Tiwari - Fundamental Analyst at Religare Broking - said the Indian stock market continued to rally, wherein the benchmark indices Nifty 50 surged by 32 per cent during FY24. The growth in the capital market was backed by domestic inflows of funds, which led to optimism in the street.
