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When securities are issued to qualified institutional buyers (QIBs) in India, the procedure is known as a qualified institutional placement (QIP). It's a way to raise money without going through the difficulties of a public offering.
In this procedure, the corporation issues QIBs with equity shares, convertible debt obligations, or any other securities. A QIB typically has to invest a minimum of Rs.10 crores in a QIP.
The Securities and Exchange Board of India (SEBI) defines QIBs as organizations that fall under its jurisdiction and are qualified to invest in securities in India. These organizations include of mutual funds, overseas institutional investors, commercial banks on the schedule, and insurance firms.
Compared to an IPO, the QIP procedure is less expensive and time-consuming (IPO). The company must also have been in business for at least three years and have a minimum net worth of Rs. 500 crores in order to qualify for a QIP, according to tight regulatory regulations. Additionally, in order to guarantee that securities are reasonably priced and are not inflated in an effort to take advantage of investors, QIPs must be produced in compliance with SEBI regulations and guidelines, including pricing criteria.
