Response hints at primary market revival, say experts
After qualified institutional placements (QIPs), there are signs of activity in the primary market. A follow-on issue by Mumbai-based power cables manufacturer Rishabhdev Technocable was subscribed nearly eight times.
The response to the issue – the first in three months comprising 9 million shares of Rs 10 each -- has raised hopes of more issues hitting the market soon. "The response to this issue indicates that the primary market in India can revive," said Dara Kalyaniwala, vice-president of investment banking at Prabhudas Leeladhar, which was managing the issue. everal initial public offers (IPOs) by smaller companies such Gini & Jony, Raj Oil Mills, Gemini Eng-Fab, Excel Infoway, Astec Lifesciences, Globus Spirits, Mid Valley Entertainment and Usher Eco Power were expected to be revived now, said merchant bankers. These companies had already received the go-ahead from the Securities and Exchange Board of India (Sebi) but were waiting for the market conditions to improve.
Edelweiss Capital Chief Executive Officer (CEO) Rashesh Shah said the market for smaller IPOs would be robust for the coming few months. "Indications are that small IPOs in the range of Rs 100-300 crore would do well, while a Rs 1,000-crore IPO would be considered fairly big,” he said.
Companies such as Adani Power have already revived their IPO process. For instance, Adani has already filed a fresh prospectus. In addition, the government is expected to list some of the public sector companies during the current financial year as part of the disinvestment programme.
Kalyaniwala said if the market remained stable post-Budget, many companies would announce public offers. "We have already filed prospectus of AMR Constructions and will announce the IPO post-Budget if the market remains stable and regulatory approvals are received.”
Rishabhdev Technocable, whose shares are listed on Pune and Jaipur stock exchanges, intended to list on the Bombay Stock Exchange (BSE). The price band for the issue was Rs 29-Rs 33 and the company managed to raise over Rs 25 crore.
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The scenario in the primary market became worse after the failure of the IPOs of Emmar MGF and Wockhardt in the beginning of 2008. And market sentiments hit rock bottom after the collapse of Lehman Brothers.
However, with stability returning to the secondary market followinig the success of mega QIPs, smaller companies are now busy chalking out plans for the primary market.