Rush for raising funds via QIPs hints at pickup in private capex cycle
market to raise fresh capital through qualified institutional placements (QIPs), a trend being viewed as a clear indicator of the rejuvenation of the private capex cycle.
During the first-half of FY24, 20 companies have together raised ₹18,500 crore through QIPs, while another dozen have already announced plans to raise up to ₹25,000 crore through this route.
The Bajaj Finance board will meet Thursday to consider a proposal to raise funds. Market analysts anticipate that the company may seek to secure as much as ₹8,000-9,000 crore via QIP and an additional ₹2,000-3,000 crore through a preferential issue.
IDFC First Bank secured about ₹3,000 crore on Wednesday through a QIP, as confirmed by banking sources. Earlier this week, Cholamandalam Investment and Finance launched a ₹4,000 crore QIP, with an equity component of ₹2,000 crore and compulsory convertible debentures (CCD) of ₹2,000 crore.
According to bankers, most of the QIP funds will be used for new projects, modernisation, infrastructure development, and purchase of capital goods, while lenders would utilize the proceeds for long-term capital requirements.
«The surge in fundraising activity can be attributed to government initiatives aimed at revitalising the economy, which is now manifesting in tangible outcomes such as an upswing in consumer demand and a corresponding resurgence in private capital expenditures,» said V Jayashankar, member of board, Kotak Investment Banking.
