Weighed down by the uncertainty following the global financial turmoil, public issues by companies have almost disappeared. The amount raised through initial public offers (IPOs) and follow-on public offers (FPOs) touched a five-year low in 2008.
According to Prime Database, the amount collected through IPOs and FPOs declined 63 per cent to Rs 16,927 crore in 2008 against Rs 45,137 crore last year. This is 31 per cent lower than Rs 24,679 crore raised in 2006.
The Bombay Stock Exchange Sensex has declined 52.83 per cent so far in 2008, as compared to over 40 per cent appreciation in each of the last three calendar years.
Ironically, 2008 saw the largest-ever IPO in India - from Reliance Power for Rs 10,123 crore. This accounted for 60 per cent of the year’s total mobilisation. There were only two other issues of over Rs 1,000 crore each compared to six in the preceding year. As many as 22 of the 38 issues were of less than Rs 100 crore. As many as 14 were of less than Rs 50 crore.
In terms of number of issues also, the performance during the year was dismal. Compared to 106 public equity issues in the previous year, 2008 recorded only 38 public issues, registering a 64 per cent decline.
Only six of the 37 IPOs received oversubscription of more than 10 times, compared with 50 out of 101 IPOs (50 per cent) in 2007. As many as 14 issues barely managed to get a one-time subscription. Worse, three IPOs had to be cancelled due to lack of response, including the Rs 5,436 crore issue of Emaar MGF and the Rs 564 crore issue of Wockhardt Hospitals.
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The continued bearish conditions had another fallout. Typically, companies rush to open their IPOs immediately after getting the market regulator's approval. This year saw as many as 37 companies, planning to collectively raise Rs 29,164 crore allowing their approvals to lapse in the 90-day period because of adverse market conditions. This included some big names like Reliance Infratel (Rs 6,000 crore), Adani Power (Rs 5,630 crore), Jaiprakash Power Ventures (Rs 4,000 crore) and Future Ventures (Rs 2,660 crore).
| RAINING DISCOUNTS | ||||
| TOP 10 IPOs in 2008 | Amt rasied Rs crore | Price in Rs | % chg | |
| Issue | 24-Dec | |||
| Reliance Power | 10,123.20 | 281.25 | 117.55 | -58.20 |
| Rural Electrification Corp | 1,639.26 | 105.00 | 69.85 | -33.48 |
| IRB Infrastructure Developers | 944.57 | 185.00 | 129.95 | -29.76 |
| KSK Energy Ventures | 830.66 | 240.00 | 171.20 | -28.67 |
| Future Capital Holdings | 491.34 | 765.00 | 165.30 | -78.39 |
| Onmobile Global | 479.62 | 440.00 | 223.85 | -49.12 |
| Gammon Infrastructure | 276.39 | 167.00 | 79.10 | -52.63 |
| Shriram EPC | 150.00 | 300.00 | 146.05 | -51.32 |
| Austral Coke & Projects | 142.30 | 196.00 | 107.40 | -45.20 |
| GSS America Infotech | 139.90 | 400.00 | 123.70 | -69.08 |
The real estate sector, which had 33 per cent share of the total mobilisation in 2007, could manage only 7 per cent share in 2008.