QIPs,IPOs fall prey to weak markets

Total funds raised through QIPs fell 87.8% to R3,451cr this year

Weak equity markets have scuttled the plans of Indian corporates to raise funds via the equity route,as evidenced by the performance of Qualified Institutional Placements (QIPs) and public issues.

The total funds raised through QIPs stood at Rs 3,451 crore in the calendar year 2011 (till November),a sharp 87.8 per cent fall from the Rs 28,339 crore raised through QIP issuances in 2010. In 2009 QIPs brought in Rs 32,631 crore.

There were only eight QIP issuances until November as against 53 in the calendar year 2010 and 45 in 2009.

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Only one QIP issue,that of Canara Bank,crossed the Rs 1,000 crore mark during the year yielding Rs 1,993 crore. Four out of eight issues during the year raised less than Rs 100 crore.

The public issues (initial and follow on public offering (IPOs and FPOs) too have netted the lowest in a calendar year since 2003.

As of November,funds raised through IPOs/FPOs stood at Rs 14,021 crore

as against Rs 69,111 crore in 2010,the highest ever in a calendar year. In 2003 that figure stood at Rs 2,179 crore.

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The Indian corporate sector is showing unmistakable signs of difficulty in equity fund raising during the calendar year 2011. This will surely impact the expansion plans and capacity building in the coming fiscal year,resulting

in slowing IIP and GDP numbers, said Jagannadham Thunuguntla,head of research at SMC Global Securities.