QIP is a mechanism for publicly traded companies to obtain capital without having to file formal documentation with market regulators.
In India and other Southeast Asian countries, the usage of QIPs is very widespread.
The main goal of QIP development is to protect India from becoming overly reliant on foreign finance to fuel its economic growth.
The Securities and Exchange Board of India (SEBI) enacted this rule to prevent enterprises from relying on foreign financing.
A publicly traded firm can issue equity shares, completely and partially convertible debentures, or any other security that is convertible to equity shares in a QIP.
QIP is a fast way for a publicly-traded firm to issue shares or convertible instruments to a small number of investors.
Only institutions or Qualified Institutional Buyers (QIBs) can participate in a QIP issuance, unlike an Initial Public Offerings (IPOs) and Follow on Public Offers (FPOs).
Mutual funds, domestic financial institutions including banks and insurance firms, venture capital funds, foreign institutional investors, and others are all examples of QIBs
Importance of QIPs
QIPs are less time-consuming for the issuing company than IPOs and FPOs.
It simply needs to file a placement document with the stock exchanges, which merely contains details about the issue.
In comparison to an IPO or an FPO, a QIP is also a less expensive way to raise funds.
Unlike an IPO, where an anchor investor is required to stay committed for a month, QIPs have no such limits.
Importance of QIPs
QIPs are subject to significantly fewer legal restrictions and regulations (in comparison to FPO), making them far more cost-effective.
There are also fewer legal fees and no costs associated with listing overseas.
Benefits of QIP
Time-saving
Easy Regulations
Easy Process of Investing
Cost-effective
COMMENTS