RITES Ltd, a multi-disciplinary consultancy organisation under the Ministry of Railways, has decided to postpone its initial public offering (IPO) of 10 million equity shares in the wake of high volatility in the domestic equity market.
A ministry official said that during the first week of June, Railway Board and RITES officials held a meeting to review the progress of the IPO process, in which it was decided to postpone the public issue for the time being. In the review meeting, railway officials said that certain pre-IPO transactions, which have to be finished before June 30, are unlikely to get completed before the stipulated time. Hence, they decided to postpone the issue. Apart from that, the prevailing weak market conditions also prompted RITES officials to rethink their IPO plan.
"The domestic equity market has been quite volatile during the last few months. Initially, we expected the situations to improve, but it did not happen. The market continues to be highly volatile and we decided to postpone the issue for the time being," RITES Managing Director V K Agarwal said.
An investment banker familiar with the development said any company which proposes to come out with an IPO will have to furnish the audited financial results that is not more than 180 days old. With the postponement of its IPO, RITES will be required to revalidate its financial results for the quarter ended March 31, 2008, in its red herring draft prospectus (RHDP) filed with the market regulator Securities and Exchange Board of India (Sebi).
A RITES official, who did not wish to be named, said, "All other required process for the IPO will continue to take place. When the equity market becomes stable, we will take a final call on the issue."
RITES proposes to issue 10 million fresh equity shares through its IPO in addition to another 4 million shares by way of divestment of the government's 10 per cent stake in the company that will bring down the government's total equity stake in the company to 72 per cent.
