Investors in infra firms’ QIPs lose cash despite rally

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SKS, Yes Bank, Muthoot among nine issues spinning big gains

The market rally has brought cheer to investors in recent qualified institutional placements (QIPs) as shares of most companies, especially in financial services, are ruling at a premium to the QIP issue price.

Out of 14 QIP issues in this fiscal year, nine rule above the issue price, while five are at a discount.

Investors in companies like Aban Offshore, Yes Bank, SKS Micro Finance, Karur Vysya Bank and ITD Cementation are sitting on profits as the current market price of stocks is higher than QIP issue price.

The biggest gainer is SKS Microfinance as the stock is up 45 per cent above the QIP price, followed by Muthoot Finance (up 15.5 per cent), Yes Bank (12.63 per cent), ITD Cementation (13.89 per cent) and Aban Offshore (6.81 per cent).

However, in about five companies, shares are ruling below the QIP price, including Jaiprakash Associates, GMR Infra and Reliance Communication.

For instance, in the case of JP Associates, currently stock is almost 46 per cent below the QIP price. The company had mopped up about Rs 1,500 crore at Rs 70.27 per share from institutional investors and the stock was at Rs 37.70 on Thursday.

Reliance Communication came out with one of the largest QIPs of Rs 6,100 crore in June at a price of Rs 142 per share. The current market price is Rs 112.10, down 21 per cent, while GMR Infra is down 12.88 per cent.

QIPs have seen a huge jump in recent months, as Indian companies and FIs went on a fundraising spree to prune debt.

Corporate entities have mobilised close to Rs 17,000 crore through institutional placement in the first four months of FY15.

Companies have raised Rs 16,848 crore from 14 QIP issues during the April-July period. In July, this includes a whopping Rs 9,690 crore raised through eight QIPs, Rs 6,342 crore garnered via three issues in June and Rs 816 crore in May.

The companies have been able to raise funds on the back of the bullishness in the domestic equity market, which has gained close to 30 per cent in this calendar year. The fund flow from foreign investors has been quite robust, with foreign institutional investors pumping in close to $13 billion this year.

According to analysts, a lot of large foreign and domestic funds have been active in the QIP market.

Ashutosh Maheshvari, CEO of Motilal Oswal Investment Banking, said, “QIP market will remain active as a lot of firms and banks will look at raising money in the next 3-4 months. We can expect $4-5 billion issuance in FY15.”

“Overall performances of stocks post issuance are good. In many cases, investors are sitting on good profits, especially in banking and financial services. There may be some pockets of disappointment in terms of performance of stocks after QIP issue but that is mostly in the case of infrastructure companies, where investors expected that revival would come fast. That has not happened."


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