Who are qualified institutional investors?
1. Mutual funds: These funds invest as a pool and usually invest in a variety of asset classes. Mutual funds are the main investors for QIP.
2. Pension funds: These funds usually invest for the long term and raise money for retirement. These investors can also participate in QIP.
3. Foreign portfolio investors (FPIs): These are foreign institutions that invest in the stock market in India. They are also important investors under QIP.
4. Insurance companies: These companies can also invest in QIP. They are known to raise money and invest for a long time.
5. Other financial institutions: This can include banks, financial companies and other large investors who are interested in such opportunities.
Why is raising funds through QIP more attractive for companies?
Raising funds through QIP is more attractive for companies because the process is simple and fast, allowing them to get money quickly without complex formalities. Apart from this, it has direct contact with institutional investors, which provides stability and credibility to the company. Through QIP, companies can maintain the value of their shares, as these shares are sold directly to large investors, which reduces the impact on the market. Along with this, companies can easily use the funds raised through QIP in their development plans and projects. Investors are also more interested in this process, which gives companies a better investor base.
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