Markets: Current Affairs | Economy for UPSC 2024 (Pre & Mains) PDF Download

 Page 1


MARKETS
CURRENT AFFAIRS
&
REL ATED TERMS
Page 2


MARKETS
CURRENT AFFAIRS
&
REL ATED TERMS
QUALIFIED INSTITUTIONAL PLACEMENT 
(QIP)
A QIP is a capital raising tool
In a QIP a listed company can issue equity shares, fully and partly convertible 
debentures, or any security (other than warrants) that is convertible to equity shares.
Apart from preferential allotment, this is the only other speedy method of private 
placement whereby a listed company can issue shares or convertible securities to a 
select group of investors.
But unlike in an IPO or an FPO (further public offer), only institutions or qualified 
institutional buyers (QIBs) can participate in a QIP issuance.
Qualified Institutional Buyers are those institutional investors who are generally perceived to possess 
expertise and the financial muscle to evaluate and invest in the capital markets.
QIBs include –
Mutual funds, domestic financial institutions such as banks and insurance companies, 
venture capital funds, foreign institutional investors, and others.
Page 3


MARKETS
CURRENT AFFAIRS
&
REL ATED TERMS
QUALIFIED INSTITUTIONAL PLACEMENT 
(QIP)
A QIP is a capital raising tool
In a QIP a listed company can issue equity shares, fully and partly convertible 
debentures, or any security (other than warrants) that is convertible to equity shares.
Apart from preferential allotment, this is the only other speedy method of private 
placement whereby a listed company can issue shares or convertible securities to a 
select group of investors.
But unlike in an IPO or an FPO (further public offer), only institutions or qualified 
institutional buyers (QIBs) can participate in a QIP issuance.
Qualified Institutional Buyers are those institutional investors who are generally perceived to possess 
expertise and the financial muscle to evaluate and invest in the capital markets.
QIBs include –
Mutual funds, domestic financial institutions such as banks and insurance companies, 
venture capital funds, foreign institutional investors, and others.
There are a few rules to follow:
The market regulator has stated that there should be at least two QIBs if the 
issue size is less than Rs.250 crore, 
and 
at least five investors if the size is more than Rs.250 crore.
A single investor cannot be allotted more than 50% of the issue.
Why QIP?
For the issuing company, QIPs are less cumbersome than IPOs and FPOs. 
It doesn’t have to file a pre-issue document with the capital markets regulator, and only 
a placement document with the stock exchanges, which only has details of the issue.
QIP is also a less expensive mode of raising capital than, say, an IPO, FPO or rights issue.
For the QIBs, unlike in an IPO where an anchor investor has to stay invested for a 
month, there are no such restrictions with QIPs.
Why in news?
SBI is going to raise money via QIP
Page 4


MARKETS
CURRENT AFFAIRS
&
REL ATED TERMS
QUALIFIED INSTITUTIONAL PLACEMENT 
(QIP)
A QIP is a capital raising tool
In a QIP a listed company can issue equity shares, fully and partly convertible 
debentures, or any security (other than warrants) that is convertible to equity shares.
Apart from preferential allotment, this is the only other speedy method of private 
placement whereby a listed company can issue shares or convertible securities to a 
select group of investors.
But unlike in an IPO or an FPO (further public offer), only institutions or qualified 
institutional buyers (QIBs) can participate in a QIP issuance.
Qualified Institutional Buyers are those institutional investors who are generally perceived to possess 
expertise and the financial muscle to evaluate and invest in the capital markets.
QIBs include –
Mutual funds, domestic financial institutions such as banks and insurance companies, 
venture capital funds, foreign institutional investors, and others.
There are a few rules to follow:
The market regulator has stated that there should be at least two QIBs if the 
issue size is less than Rs.250 crore, 
and 
at least five investors if the size is more than Rs.250 crore.
A single investor cannot be allotted more than 50% of the issue.
Why QIP?
For the issuing company, QIPs are less cumbersome than IPOs and FPOs. 
It doesn’t have to file a pre-issue document with the capital markets regulator, and only 
a placement document with the stock exchanges, which only has details of the issue.
QIP is also a less expensive mode of raising capital than, say, an IPO, FPO or rights issue.
For the QIBs, unlike in an IPO where an anchor investor has to stay invested for a 
month, there are no such restrictions with QIPs.
Why in news?
SBI is going to raise money via QIP
ANCHOR INVESTORS
Anchor investors or cornerstone investors (as they are called globally) are institutional investors like sovereign wealth funds, mutual funds 
and pension funds 
That are invited to subscribe for shares ahead of the IPO to boost the popularity of the issue and provide confidence to 
potential IPO investors.
The benefit for institutional investors applying in anchor quota is that they get guaranteed allotment. 
Anchor investors, cannot sell their shares for a period of 30 days from the date of allotment as against IPO investors who are allowed to 
sell on listing day.
SEBI has made number of changes to the rules related to anchor investors. 
SEBI doubled the quota reserved for anchor investors
Removed the restrictions on the maximum number of anchor investors
An issuer can now allot up to 60% of shares reserved for qualified institutional buyers (QIBs) to anchor investors. 
As typically, the QIB portion in an IPO is 50%, anchor investors can buy up to 30% of an IPO.
A healthy anchor book also gives lot of comfort to small investors as it indicates the faith shown by institutional investors.
Investment bankers can now rope in as many anchor investors as they want. 
The allotment to anchor investors is done on a discretionary basis, unlike an IPO, where the allotment has to be made on a 
proportionate basis.
Page 5


MARKETS
CURRENT AFFAIRS
&
REL ATED TERMS
QUALIFIED INSTITUTIONAL PLACEMENT 
(QIP)
A QIP is a capital raising tool
In a QIP a listed company can issue equity shares, fully and partly convertible 
debentures, or any security (other than warrants) that is convertible to equity shares.
Apart from preferential allotment, this is the only other speedy method of private 
placement whereby a listed company can issue shares or convertible securities to a 
select group of investors.
But unlike in an IPO or an FPO (further public offer), only institutions or qualified 
institutional buyers (QIBs) can participate in a QIP issuance.
Qualified Institutional Buyers are those institutional investors who are generally perceived to possess 
expertise and the financial muscle to evaluate and invest in the capital markets.
QIBs include –
Mutual funds, domestic financial institutions such as banks and insurance companies, 
venture capital funds, foreign institutional investors, and others.
There are a few rules to follow:
The market regulator has stated that there should be at least two QIBs if the 
issue size is less than Rs.250 crore, 
and 
at least five investors if the size is more than Rs.250 crore.
A single investor cannot be allotted more than 50% of the issue.
Why QIP?
For the issuing company, QIPs are less cumbersome than IPOs and FPOs. 
It doesn’t have to file a pre-issue document with the capital markets regulator, and only 
a placement document with the stock exchanges, which only has details of the issue.
QIP is also a less expensive mode of raising capital than, say, an IPO, FPO or rights issue.
For the QIBs, unlike in an IPO where an anchor investor has to stay invested for a 
month, there are no such restrictions with QIPs.
Why in news?
SBI is going to raise money via QIP
ANCHOR INVESTORS
Anchor investors or cornerstone investors (as they are called globally) are institutional investors like sovereign wealth funds, mutual funds 
and pension funds 
That are invited to subscribe for shares ahead of the IPO to boost the popularity of the issue and provide confidence to 
potential IPO investors.
The benefit for institutional investors applying in anchor quota is that they get guaranteed allotment. 
Anchor investors, cannot sell their shares for a period of 30 days from the date of allotment as against IPO investors who are allowed to 
sell on listing day.
SEBI has made number of changes to the rules related to anchor investors. 
SEBI doubled the quota reserved for anchor investors
Removed the restrictions on the maximum number of anchor investors
An issuer can now allot up to 60% of shares reserved for qualified institutional buyers (QIBs) to anchor investors. 
As typically, the QIB portion in an IPO is 50%, anchor investors can buy up to 30% of an IPO.
A healthy anchor book also gives lot of comfort to small investors as it indicates the faith shown by institutional investors.
Investment bankers can now rope in as many anchor investors as they want. 
The allotment to anchor investors is done on a discretionary basis, unlike an IPO, where the allotment has to be made on a 
proportionate basis.
PRIVATE PLACEMENT V S PREFERENTIAL ALLOTMENT
Difference between Private Placement and Preferential Allotment under Companies 
Act, 2013
Private placement (or non-public offering) is a funding mode through Shares or Other 
Securities 
which are sold not through a public offering, but rather through a private offering, mostly to a 
small number of chosen investors.
Preferential Allotment is the process by which allotment of securities/shares is done on a 
preferential basis to a select group of investors. 
In this Company makes bulk allotment of Shares/ Securities to individuals, companies, venture 
capitalists or any other person through a fresh issue of shares.