QIP fundraising hits record high in 2024, real estate bags largest share with ₹22,320 crore: Anarock

The Indian stock market has witnessed significant volatility in recent months, with steep corrections affecting investor sentiment. The correction phase, which began in late September 2024 after record highs in the Nifty 50 and Sensex, has led to a sharp decline in key indices.

However, despite this downturn, the momentum in Qualified Institutional Placements (QIPs) has remained strong, with 2024 marking a record year for fundraising, according to Anarock research. While retail and short-term investors exercise caution in response to market fluctuations, institutional investors continue to capitalize on long-term growth prospects in the real estate sector.

Anuj Puri, Chairman of Anarock Group, highlighted the resilience of the real estate sector amid this fundraising surge. "Anarock’s analysis of QIP fundraising in 2024 underscores the real estate sector's strength, demonstrating strong institutional confidence in India’s economic fundamentals. Despite market volatility, capital markets remain robust, attracting strategic investments. Our research reveals that the real estate sector remained a dominant contributor, with eight developers and one REIT collectively raising ₹22,320 crore. This financial strength is set to support a massive wave of upcoming real estate developments," Puri stated.

Record QIP Fundraising Across Sectors

The overall QIP fundraising across sectors in 2024 reached an all-time high, with 99 issues raising ₹1,41,482 crore. This represents a 75 per cent increase from the previous record of ₹80,816 crore in 2020. According to Anarock, the real estate sector emerged as the leader in QIP fundraising, both in terms of capital raised and the number of issues.

"The real estate sector, including developers and REITs, topped QIP fundraising charts in 2024, setting a new benchmark for capital infusion. The number of QIP issues in 2024 was twice that of the previous year, making it the highest-ever recorded in a single year. Institutional investors remain highly optimistic about the growth potential of the real estate sector," Puri remarked.

Why QIPs Are Gaining Popularity

QIPs offer several advantages for developers compared to private equity or traditional bank loans. According to Anarock, the primary benefits include:

• Faster and more cost-effective fundraising mechanisms.
• Liquidity access with minimal shareholder dilution, preserving ownership structures.
• Attraction of institutional investors such as mutual funds and pension funds, providing substantial capital for sectoral growth.
• Flexible fund utilization for land acquisition, construction, or debt refinancing, ensuring financial stability.
• Market credibility enhancement, signaling strong growth potential to investors.

These benefits collectively accelerate project timelines, enabling developers to undertake ambitious expansion plans.

QIP Trends from Previous Years

In 2023, QIP fundraising across all sectors amounted to ₹55,109 crore, generated through 43 issues. This was comparable to the ₹56,152 crore raised in 2017. Notably, real estate developers did not raise any funds through QIPs in 2023, making the resurgence in 2024 even more significant.

Market Trends and Real Estate Performance

The broader equity market in 2024 experienced significant volatility. The Nifty 50 index performed well in the first half of the year, driven by strong corporate earnings, foreign institutional investment inflows, and positive economic indicators such as GDP growth and declining inflation. However, the latter half of the year saw increased uncertainty due to global geopolitical tensions, fluctuating oil prices, and shifting monetary policies. These factors triggered market corrections, prompting investors to adjust their strategies.

Despite these headwinds, five Nifty sectoral indices posted gains of over 30 per cent in 2024. The Real Estate index secured the fourth spot, registering an impressive 34.67 per cent annual gain, according to Anarock.

Outlook for 2025

Looking ahead, Anarock expects a mixed outlook for QIP fundraising in 2025, given the broader market volatility. "The heightened volatility in the latter half of 2024 suggests some level of caution among investors going into 2025. However, the strong performance of the Real Estate index, despite market uncertainties, signals sustained investor confidence in the sector," Puri noted.

Institutional investors are likely to continue supporting large and listed developers in 2025, especially as they seek stable investment avenues amid broader market fluctuations. If global monetary policies stabilize and domestic economic indicators remain strong, QIP activity in real estate may witness further momentum. This will, in turn, drive expansion, land acquisitions, and debt refinancing initiatives, reinforcing the sector’s long-term growth trajectory.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.