Qualified institutional placement
What is a Qualified institutional placement?
This is a way for companies, usually in India, to raise money by issuing securities to qualified institutional buyers. It was designed to help Indian companies raise capital from the domestic market, rather than overseas.
Where have you heard about Qualified institutional placement?
It's a relatively new process, first introduced in 2006. Unitech, one of India's biggest real estate companies, raised $325 million from a QIP in 2009 after struggling to repay a large amount of debt.
What you need to know about Qualified institutional placement.
It was set up by the Securities and Exchange Board of India in an effort to stop companies relying too much on foreign capital. The process is designed to be easy for firms because it doesn't involve complex requirements such as submitting pre-issue filings to market regulators. Before this method was introduced, authorities in India were concerned that firms were gaining access to funding from other countries by issuing securities such as American depository receipts. QIP guidelines were introduced to encourage Indian companies to raise funds domestically instead.