A Qualified Institutions Placement is a private placement of eligible securities by a listed company to qualified institutional buyers. The route was introduced in 2006 to allow Indian companies to raise capital from domestic institutional investors without the cost and time of a public offering, and it is governed by Chapter VI of the ICDR (Regulations 171 to 180).
The Eligible Securities and the QIBs
The eligible securities include equity shares, non-convertible debt instruments along with warrants, and convertible securities other than warrants. The QIBs include mutual funds, venture capital funds, alternative investment funds, foreign portfolio investors other than individuals and family offices, public financial institutions, scheduled commercial banks, multilateral and bilateral development financial institutions, state industrial development corporations, insurance companies, provident funds with a minimum corpus of twenty-five crore rupees, pension funds, the National Investment Fund, and systemically important non-banking financial companies.
The Eligibility Conditions
Regulation 172 prescribes the eligibility conditions. The issuer must have passed a special resolution approving the QIP, except where the offer for sale is by the promoters or promoter group for compliance with the minimum public shareholding requirements. The issuer must not be prohibited from accessing the capital markets, and neither the issuer nor any of its promoters or directors may be a fugitive economic offender or a wilful defaulter. The issuer must comply with the minimum public shareholding requirement, and the QIP must not result in a breach of the requirement.
The Placement Document and the Pricing
The QIP requires a preliminary placement document and a placement document, which must contain the disclosures specified in Schedule VII of the ICDR. SEBI has reduced the disclosure requirements for QIPs in 2025, but the core disclosures on the risk factors, the use of proceeds, and the financial statements remain mandatory.
The pricing is determined in accordance with Regulation 176, and the floor price is the higher of the 90-trading-day VWAP and the 10-trading-day VWAP preceding the relevant date, subject to the applicable adjustments. The QIP is not subject to the strict lock-in that applies to a preferential issue, and the QIBs are excluded from the two-hundred-person limit under the private placement regime.
The Process
The process begins with the board’s approval and the shareholders’ special resolution. The company then files the preliminary placement document with the stock exchanges and obtains the in-principle approval. The placement is marketed to the QIBs, and the allotment is made on the price discovered through the book-building or the fixed-price process. The company files the placement document and the post-issue report with the stock exchanges, and it completes the listing formalities.
A technically sound QIP is structured to comply with the eligibility conditions, the disclosure norms, and the pricing rules, and it is completed within the timeline that the ICDR prescribes.
Call to Action
Anuj Desai & Associates advises listed companies on the QIP process—from the eligibility analysis and the special resolution to the placement document, the pricing, and the listing formalities. If you are planning a QIP, we can help you navigate the ICDR requirements.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230
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