Guest Column: New ray of hope for IPO market

MCX had stellar listing today. The listing has generated hopes of revival of IPO market. Almost in all the metrics the MCX IPO has proved to be highly successful. It has brought much needed hope and smile to the Indian IPO market. However, MCX IPO may be the lone shining star in the IPO market. The year 2012 has already seen call-off of eleven IPOs. The probable amount that these eleven IPOs were planning to raise was to an aggregate of Rs 4,771 Crores.

The list of the eleven companies who have called-off their IPOs during 2012 include Micromax, Embassy Property, Lokmat Media, VRL Logistics, etc. This is in additon to the call-off of twenty-nine companies during 2011 calendar year. The probable amount that these companies were planning to raise was to an aggregate of Rs 32,400 Crores.

So, starting 1st January 2011 till date, about forty IPOs were called off. The total amount they were expected to raise was about Rs 37,169 Crores. All these companies had valid SEBI approval in hand for their IPOs. Even then, they couldn’t open their IPOs within the validity period of one year from the date of SEBI approval.

This surely will impact the Indian corporate's ability in fund raising to finance their expansion projects resulting in slow down in capacity building and job creation. 

(Click here to see the table)

Further, the government's disinvestment program which was supposed to bring public issues of several blue-chip PSUs couldn’t take off. The recent lukewarm response to ONGC auction can also impact the confidence of the public issue market. IPO market is smiling after MCX listing. However, it needs to be seen whether that smile will get converted into jubilation.

(The author is Head of Research with SMC Global)