Saturday, September 30, 2006

GDRs are now passé

QIP (Qualified Institutional Placement) has emerged as a new fund-raising instrument for listed corporates in India. This is supposed to overcome the limitations of a GDR or FCCB (Foreign Currency Convertible Bond) issue as well as private placement. Funds can be raised from foreign as well as domestic institutional investors without getting listed on a foreign exhange, which is a lengthy process. A QIP issue also has no lock-in clause, unlike a private placement where the funds are locked in for one year.

So far three companies have raised money in this fashion. The first deal was by Edelweiss Capital for Spentex Industries that raised Rs. 46 cr.