From drought to revival: Are QIPs paving the way for new listings?

Subscribe to enjoy similar stories. The once-booming initial public offerings (IPO) market, fueled by frenzied retail participation, has hit a speed bump. The recent sell-off in Indian equities has forced companies to defer listings, with March seeing no mainboard public listing, the first monthly lull since May 2023.

Despite five consecutive months of decline, particularly the nearly 6% Nifty drop in February due to global trade tensions, rising bond yields, and persistent foreign portfolio investor (FPI) outflows, a market rebound in March offers a potential silver lining. The Nifty rose 6.3% as FPIs resumed buying in the latter half of the month, though they remained net sellers overall. This recovery, coupled with the resurgence of qualified institutional placements (QIPs), has sparked optimism.

Notably, several public sector banks, including Indian Overseas Bank, Bank of Maharashtra, Central Bank of India, Punjab & Sind Bank, and UCO Bank, are now pursuing QIPs to meet minimum public shareholding norms, further bolstering fundraising momentum.QIPs allow publicly traded companies to raise funds for projects or capital needs by issuing securities to qualified institutional buyers. However, rising volatility poses a challenge to fundraising efforts. "During volatile phases, IPO activity tends to remain subdued, mirroring trends in the QIP market," noted Pranav Haldea, managing director at Prime Database.

He added further that QIPs and IPOs always see traction in bullish markets. "Late March saw renewed QIP activity, with three public sector banks entering the market. As some bullishness returned, companies tested investor appetite with smaller issuances.