What is QIP?
QIP means Qualified institutional placement which can be termed as a capital raising tool by a listed company who can issue equity shares, securities other than warrants, partly and fully convertible debentures which can be converted into equity shares to a Qualified Institutional Buyer (QIB). This can be seen as a method that companies use to raise money quickly other than preferential allotment. This method does not involve many procedures to work out to bring it to life with the market regulator.
QIP was introduced in 2006 by SEBI which would enable the listed companies to raise money from the domestic markets within a short time frame. Another advantage with this method was to prevent the Indian companies from having over dependence on the foreign capital. Before the introduction of the QIP there were many complications that were associated in raising the funds from the domestic markets.
The issue of securities would be allowed only to the QIB’s. The QIB’s shall not have any relation with the promoters of the issue nor can he be a promoter. The issue is managed by SEBI registered banker. This issue does not need to have a pre-issuing filing with the SEBI. The documents can be found at the Websites of the issuer and also with the stock exchanges. It would be accompanied by an disclaimer that the issue is not for public and its only for QIB’s.