Shareholders of Indian Renewable Energy Development Agency Ltd. (IREDA) have approved a plan to raise up to ₹5,000 crore through Qualified Institutional Placement (QIP) of equity shares.
Advantages | Disadvantages |
Faster Process: Requires minimal regulatory approval, reducing fundraising time compared to Follow-on Public Offers (FPOs). | Limited Investor Base: Only institutional investors can participate, excluding retail investors. |
Lower Costs: Saves on legal fees and overseas listing expenses. | Market Dependency: Success depends on market conditions and investor sentiment. |
No Need for Regulatory Filings: No pre-issue filings required with SEBI. | Stake Dilution: Existing shareholders may see a reduction in their ownership percentage. |
Encourages Domestic Capital Raising: Reduces reliance on foreign funds like American Depositary Receipts (ADRs) and Foreign Currency Convertible Bonds (FCCBs). | Risk of Underpricing: Companies may offer shares at a discount, reducing potential capital raised. |
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QIPs remain a popular capital-raising tool in India, balancing speed and flexibility with certain investor limitations.
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