Investors stay away from QIPs

By siliconindia   |   Wednesday, 10 June 2009, 00:47 IST
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Investors stay away from QIPs
Bangalore: Financially strong local investors like insurance companies and state-owned financial institutions have decided to abstain from qualified institutional placements (QIPs) by corporate. An official at a government owned insurance firm said, �It has been a policy decision to keep away from recent QIP issuances. We have turned away many bankers who came to us with QIP proposals.� Corporate finds QIPs a quick way to raise money but many institutions feel they don�t have enough time to examine the issue. The pace at which such issuances are hitting the market is also worrying the investors.. In the coming weeks, over Rs 18,000 crore of QIPs are expected to hit the market, up from 188 crore in the previous fiscal. Over the past two months, corporate have raised close to 5,000 crore through the QIP route. QIPs have been washed up by foreign institutional investors, who have returned to the market with a vengeance. Domestic institutions are, however, not allowing themselves to be sucked into this buying delirium. Domestic Financial Institutions (DFIs) are also cautious since many of the issuers are facing liquidity problems and are raising money to repay lenders after the recent run-up in share prices. �We take a case-to-case view on QIPs. The main criteria is whether we would invest in this company in the secondary market and whether we find the valuations right,� said Sashi Krishnan, CIO, Bajaj Allianz Life Insurance CIO. He added that his company also kept an eye on the issuers� corporate governance track record to know where institutional investors stand. On the same term, S Sarkar, MF Asset Management Chief Executive, LIC said, �Unless an institution was buying in large lots, secondary market purchases appeared to be a better strategy when compared with a QIP. The call we need to make is whether this is a structured bull run?�

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