Despite bullish stock markets so far this year, four companies have refrained from coming out with initial public offers (IPOs) worth over Rs 700 crore, letting their regulatory approvals lapse.
The companies which have let their regulatory approvals lapse include Micromax Mobiles, Pride Hotels, Betul Oil and Tara Jewels. These public issues were to raise about Rs 701 crore, according to an analysis. “The year 2012 has started on a very positive tone for the capital markets, with elevated mood of the sentiment and significant FII inflows,” said SMC Global Securities Strategist and Head of Research Jagannad-ham Thunuguntla.
“Despite such positive mom-entum in secondary market that momentum could not spillover on to the IPO markets and about four IPOs were already called off so far this year,” he added.
Interestingly, there are at least 10 other companies who have valid approval in hand and are left with just two months in their validity period of one year from the date of approval.
These companies include Marck Biosciences, Tijaria Polypipes, Tara Health Foods, Embassy Property Developers, Dev Procon, VRL Logistics, Lokmat Media, Aravali Infrapower, Joyalukkas India and Semantic Space Technologies. The total amount that is expected to be raised by these 10 IPOs is to the tune of about Rs 4,210 crore.
“The government’s disinvestment programme is also in “wait-and-watch” mood, the IPO market is not getting the kind of momentum that is expected to happen. If this slowdown in IPO market continues, then there shall be significant impact on the fund raising abilities of Indian corporates. This will also have impact on the ability of exits for private equity funds,” he added.
Tara Jewels was the first company that failed to launch its Rs 50 crore IPO before the regulatory approval lapsed on January 3, followed by Pride Hotels which failed to bring its Rs 125 crore IPO till January 12, Micromax Informatics could not come out with its Rs 426 public offer which expired on January 13 and Betul Oil is the latest addition to the list after the approval for its Rs 100 crore public issue expired on January 18.
Last year, 29 companies, including Reliance InfraTel Ltd, Lodha Developers, Ambience, Glenmark Generics and BPTP, had axed their IPO plans. The aggregate amount supposed to be raised by those 29 IPOs was to the tune of Rs 32,398 crore.
