Qualified Institutional Placements - An Exploratory Study in the Indian Context

35 Pages Posted: 18 Sep 2012

See all articles by Soumya Guha Deb

Soumya Guha Deb

Indian Institute of Management (IIM), Sambalpur

Pradip Banerjee

National Institute of Industrial Engineering

Prithviraj Banerjee

Globsyn Business School (GBS)

Date Written: August 10, 2012

Abstract

Qualified Institutional Placement (QIP) was introduced in India in 2006 to make it easier and faster for companies to raise equity directly from However, there are very few studies looking at the market reaction of QIPs in India. When a company goes for a QIP, it also has the choice of offering shares through a rights issue to existing shareholders. A rights issue would not dilute the stake of existing owners. Given the prevalence to family controlled businesses in India, this would be a good route to raise capital and avoid stake dilution. In this context we tried to examine what determines a company goes for a QIP or a rights issue. To address this question, we look at the role of firm characteristics like promoter’s holdings, proxies for information asymmetry, and other variables in determining the choice between a rights issue vs. a QIP. This paper would add to the existing body of knowledge on private placements, and provide deeper insights on why companies might prefer a QIP over other types of seasoned equity offerings.

Keywords: Qualified Institutional Placement, Right issue, monitoring hypothesis, certification hypothesis, Seasoned equity offerings

JEL Classification: G18, G32, G34

Suggested Citation

Guha Deb, Soumya and Banerjee, Pradip and Banerjee, Prithviraj, Qualified Institutional Placements - An Exploratory Study in the Indian Context (August 10, 2012). Available at SSRN: https://ssrn.com/abstract=2147706 or http://dx.doi.org/10.2139/ssrn.2147706

Soumya Guha Deb

Indian Institute of Management (IIM), Sambalpur ( email )

Burla, 768019
India

Pradip Banerjee (Contact Author)

National Institute of Industrial Engineering ( email )

Vihar Lake
Powai
Mumbai, MA 400087
India

Prithviraj Banerjee

Globsyn Business School (GBS) ( email )

Sector V
Salt Lake
Kolkata, West Bengal 700091
India

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
147
Abstract Views
921
rank
237,737
PlumX Metrics