Definition
Qualified Institutional Placement (QIP)
A QIP is a quick way for a listed company to raise capital by issuing shares only to qualified institutional buyers, without a lengthy public offer.
A QIP lets an already-listed firm sell fresh shares to QIBs (mutual funds, FIIs, insurers, banks) under a streamlined SEBI process, often completed in days. The price must be at or above a SEBI-prescribed floor based on the recent average price.
QIPs are popular because they avoid the cost and delay of an FPO or rights issue and bring in sophisticated investors. They do dilute existing holders, but the involvement of large institutions is often read as a vote of confidence.
Related terms
- Preferential AllotmentPreferential allotment is the issue of shares or convertibles by a listed company to select investors on a private basis, subject to SEBI pricing rules.
- Anchor InvestorAnchor investors are large institutional investors who are allotted IPO shares a day before the issue opens to the public, lending credibility to the offering.
- Follow-on Public Offer (FPO)An FPO is a public issue of shares by a company that is already listed, used to raise additional capital or let existing holders sell their stake.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.