New Enroll in our GIC Finance Online Course Here!

    Register

    Question

    In the context of the Indian Renewable Energy

    Development Agency Limited (IREDA) receiving approval from the Department of Investment and Public Asset Management (DIPAM) to raise ₹4500 crore through fresh equity through QIP route, what does the term "Qualified Institutions Placement (QIP)" refer to?
    A A method where a company raises funds by issuing shares to the general public through an initial public offering (IPO). Correct Answer Incorrect Answer
    B A method of raising capital where a company issues shares directly to foreign investors without involving domestic institutions Correct Answer Incorrect Answer
    C A method where a company issues equity shares only to a select group of pre-determined individual retail investors. Correct Answer Incorrect Answer
    D A method through which a listed company raises capital by issuing shares or convertible securities only to qualified institutional buyers, without undergoing complex regulatory requirements associated with public offerings Correct Answer Incorrect Answer
    E A method of raising funds by borrowing directly from international banks at lower interest rates to finance large-scale projects. Correct Answer Incorrect Answer

    Solution

    Qualified Institutions Placement (QIP) is a mechanism in India used by publicly listed companies to raise capital by selling shares or convertible securities to qualified institutional buyers (QIBs). It allows companies to bypass complex procedures and regulatory hurdles that are generally associated with public offerings such as IPOs. The main advantage of QIP is the simplified process, which enables quicker capital raising while maintaining compliance with regulations. This method is especially useful for companies like IREDA, which aim to raise large amounts of capital to scale up operations—in this case, to support renewable energy financing.

    Practice Next