According to a recent report, listed Indian companies could be allowed to launch qualified institutional placement (QIP) of shares through exchanges at International Financial Service Centres (IFSCs) using an abridged prospectus.
- A qualified institutional placement (QIP) is a way for listed companies to raise capital from qualified institutional buyers without having to submit legal paperwork to market regulators.
- It is a common method of private placement where the company does not dilute its management stake and also does not need to repeat elaborate paperwork like it did during its IPO.
- Market regulator Securities and Exchange Board of India (SEBI) laid down the guidelines for the QIP route in year 2006.
- It was created primarily to avoid the dependence of companies on foreign capital resources.
- Earlier, since raising finance in the domestic market involved a lot of complications, Indian companies used to raise funds from the overseas markets. So to prevent this, SEBI introduced this process so as to make the raising of funds easier in the domestic market.
