With the secondary market losing steam worldwide since January 2008, fund mobilisations through public offers have hit a new five-year low.
Only 19 companies have entered the capital market in the current financial year so far, mobilising Rs 1,968 crore, the lowest since 2003-04. Interestingly, of these 19 public offers, only four are trading above the issue prices while 13 are trading at discounts. Two are not yet listed. IPO investors have become cautious as 70 per cent public offers made last financial year are currently trading at a discount.
Following this poor show of public offers and a slippery secondary market, several Indian promoters have withdrawn their plans to raise funds through public offers. The Securities and Exchange Board of India (Sebi) data show that 24 promoters, who were planning to raise Rs 21,300 crore, have either put their plans on hold or have withdrawn their offer documents after submitting the red-herring prospectus.
| BEAR BLUES | |||
|
Price in Rs | |||
% chg
Issue
For instance, four big-size offerings — Reliance Infratel (Rs 6,000 crore), Jaiprakash Power Venture (Rs 4,000 crore), UTI Asset Management (Rs 2,000 crore) and Multi Commodity Exchange (Rs 600 crore) — were shelved after getting Sebi’s nod.
According to Prime Database, four companies, collectively planning to raise Rs 4,517 crore, have withdrawn their offer documents since April 2008. This includes JSW Energy (Rs 4,000 crore), RNS Infrastructure (Rs 300 crore), Cellebrum Technologies (Rs 200 crore) and Elysium Pharmaceuticals (Rs 17 crore).
Another 12 companies, which were planning to raise Rs 3,643 crore and had got the green light from Sebi, would allow their approvals to expire, due to prevailing dull sentiments. The list of companies includes names such as Mahindra Holiday Resorts (Rs 1,000 crore), DB Corporation (Rs 1,000 crore), Cox & Kings (Rs 400 crore) and RITES (Rs 350 crore).
Many real estate and financial services sector companies have postponed or cancelled their IPO plans after stocks from these sectors reported more than 50 per cent erosion in their market value. Promoters of Emaar MGF Land, Wockhardt Hospitals and SVEC Constructions pulled out their IPOs, amounting to Rs 1,317 crore, due to low response from retail investors.
There are over 100 companies such as Essar Power, GMR Energy, ICICI Securities, Lodha Builders, Sterlite Energy and SRL Ranbaxy, which had announced their IPO intentions but have now stalled their plans.
