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Qualified institutional placements value down 42 percent
Friday, 26 September 2008, 16:24 IST
New Delhi: The market value of qualified institutional placements (QIPs) made by 49 Indian companies since the first one in September 2006 to raise $6.58 billion (
263.2 billion) has eroded 42.13 percent to $2.77 billion (110.8 billion), according to a study.
The study titled 'QIPs - Flavour of 2007, Out-of-flavour in 2008', prepared by the capital markets arm of India's fourth largest share brokerage firm, the Delhi-based SMC Group, was made available to IANS here Thursday.
"Investors have suffered some of the biggest losses in companies such as Ansal Properties, GMR Infrastructure, Suzlon Energy and Kotak Mahindra Bank, among others,- the author of the study Jagannadham Thunuguntla, head of capital markets at SMC said.
Market regulator Securities and Exchange Board of India (Sebi) in May 2006 announced guidelines allowing Indian companies to raise funds from qualified institutional investors such as banks, mutual funds, venture capital funds, insurance companies and foreign institutional investors.
QIPs are a quick way of raising funds for companies as they require no regulatory clearances and also do not involve any dilution of management control as placements are made to a clutch of investors, unlike preferential allotment to private equity funds.
Preferential allotment always involves some kind of dilution of management control and interference by the investor in the form of a board seat or other arrangements.
Ansal Properties raised $153.17 million but the market value of the investment currently is just $25.76 million, a whopping erosion of 83.2 percent, Thunuguntla said.
GMR Infrastructure raised $1 billion and has lost 69.26 percent, Suzlon Energy raised $551.60 million and has lost 59.9 percent, while Kotak Mahindra's $410.52 million has eroded 48.32 percent.
In 2006, a total of 16 QIPS raised $1.05 billion and their current market value is just $703 million, a loss of 33.1 percent, the study said.
In 2007, 29 companies raised $5 billion and their current value is $2.78 billion, a loss of 44.35 percent.
This year, only four QIPs raised $529 million, the current market value of which is $323 million, a loss of 39.02 percent.
Sectorally, the real estate sector lost the most. The current value of investments at $633 million has come down to $195.21, a loss of 69.17 percent.
Investment of $1.428 billion in the infrastructure segment has shed 56.05 percent, while $211 million invested in the retail segment has eroded 46.35 percent.
In the energy sector, investment at $951 million has lost 42.42 percent, while that in information technology companies, which raised $50 million, are now down 36.77 percent.
The banking sector, which raised the most funds through QIPs at $2.22 billion, has shed 33.31 percent. Media sector investments at $102 million are down 36.77 percent, while the manufacturing sector, which raised $697 million, has lost 27.72 percent.
The sector to have suffered the least is engineering and construction, which raised $87 million and is currently valued at $76.21 million, a loss of 12.05 percent.
The remaining investment clubbed under the category of others was $207 million and is now valued at $171.68, a loss of 17.26 percent.
Although QIPs do not require disclosure of the names of investors, market sources said some of the investors include Credit Agricole, Citigroup, Deutsche Bank, State Bank of India and Canara Bank.
Source: IANS
263.2 billion) has eroded 42.13 percent to $2.77 billion (110.8 billion), according to a study.
The study titled 'QIPs - Flavour of 2007, Out-of-flavour in 2008', prepared by the capital markets arm of India's fourth largest share brokerage firm, the Delhi-based SMC Group, was made available to IANS here Thursday.
"Investors have suffered some of the biggest losses in companies such as Ansal Properties, GMR Infrastructure, Suzlon Energy and Kotak Mahindra Bank, among others,- the author of the study Jagannadham Thunuguntla, head of capital markets at SMC said.
Market regulator Securities and Exchange Board of India (Sebi) in May 2006 announced guidelines allowing Indian companies to raise funds from qualified institutional investors such as banks, mutual funds, venture capital funds, insurance companies and foreign institutional investors.
QIPs are a quick way of raising funds for companies as they require no regulatory clearances and also do not involve any dilution of management control as placements are made to a clutch of investors, unlike preferential allotment to private equity funds.
Preferential allotment always involves some kind of dilution of management control and interference by the investor in the form of a board seat or other arrangements.
Ansal Properties raised $153.17 million but the market value of the investment currently is just $25.76 million, a whopping erosion of 83.2 percent, Thunuguntla said.
GMR Infrastructure raised $1 billion and has lost 69.26 percent, Suzlon Energy raised $551.60 million and has lost 59.9 percent, while Kotak Mahindra's $410.52 million has eroded 48.32 percent.
In 2006, a total of 16 QIPS raised $1.05 billion and their current market value is just $703 million, a loss of 33.1 percent, the study said.
In 2007, 29 companies raised $5 billion and their current value is $2.78 billion, a loss of 44.35 percent.
This year, only four QIPs raised $529 million, the current market value of which is $323 million, a loss of 39.02 percent.
Sectorally, the real estate sector lost the most. The current value of investments at $633 million has come down to $195.21, a loss of 69.17 percent.
Investment of $1.428 billion in the infrastructure segment has shed 56.05 percent, while $211 million invested in the retail segment has eroded 46.35 percent.
In the energy sector, investment at $951 million has lost 42.42 percent, while that in information technology companies, which raised $50 million, are now down 36.77 percent.
The banking sector, which raised the most funds through QIPs at $2.22 billion, has shed 33.31 percent. Media sector investments at $102 million are down 36.77 percent, while the manufacturing sector, which raised $697 million, has lost 27.72 percent.
The sector to have suffered the least is engineering and construction, which raised $87 million and is currently valued at $76.21 million, a loss of 12.05 percent.
The remaining investment clubbed under the category of others was $207 million and is now valued at $171.68, a loss of 17.26 percent.
Although QIPs do not require disclosure of the names of investors, market sources said some of the investors include Credit Agricole, Citigroup, Deutsche Bank, State Bank of India and Canara Bank.
Source: IANS