Is there rule on the minimum of buyers participating in QIP?
There is no fixed rule on the minimum number of institutional buyers participating in a QIP. However, it is necessary that the company raises funds from at least two qualified institutional investors (QIBs). This ensures that the investment is broad-based and there is less dependence on a single investor. Similarly, the QIP process requires the participation of different institutional investors, but there is no strictly prescribed limit for the minimum number.
How does QIP determine pricing?
The basis for pricing a QIP depends on several factors. First, the company analyzes its past share prices, market conditions and investor demand. Usually, the price for a QIP is based on the average market price at that time, which is seen in the few days before the day of issue of shares.
Apart from this, the company also has to keep in mind that the price is appropriate to attract investors. The pricing process involves discussions between the company and its financial advisors to ensure that the price of the shares to be issued is attractive to investors and profitable for the company.
Finally, as per SEBI regulations, the company has to adopt a specific method to determine the price of the share, which maintains market transparency. Thus, several financial and market factors work together in pricing a QIP.
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