Definition
Qualified Institutions Placement (QIP)
A QIP is a fast way for a listed company to raise capital by selling shares only to qualified institutional buyers, without a full public offer.
Introduced by SEBI in 2006, a QIP lets a listed company place equity (or convertible securities) directly with QIBs at a price tied to a recent market-price formula, with minimal documentation compared with a public issue. It is quicker and cheaper than an FPO.
QIPs are widely used by Indian companies to raise growth or deleveraging capital and to help promoters meet minimum public shareholding norms. A minimum number of allottees and a floor price formula apply to prevent abuse.
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.
- Qualified Institutional Buyer (QIB)A QIB is a large, sophisticated institutional investor — such as a mutual fund, bank, insurer or FPI — that is allotted a dedicated portion of an IPO.
- Minimum Public ShareholdingMinimum public shareholding (MPS) is the SEBI rule requiring listed companies to keep at least 25% of shares with the public.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.