The Indian primary market has virtually dried up as the total value of initial public offerings (IPOs) of 2007 has witnessed an erosion of about $3.43 billion so far this year, with the media space being the worst hit, a latest report says.
The bullish trend in the capital market was see in the IPO volume of 2007, with a record volume of $8.18 billion was raised.
However, rough market conditions have resulted in a negative return of 42 per cent or a value erosion of $3.43 billion in absolute terms till October 10, according to a report of Nexgen Capitals, the merchant-banking arm of brokerage firm SMC Global Securities.
“In a bear market, fund-raising becomes difficult. An excess of bullishness last year resulted in the bear market this year. In a bull market, takers for every issue at every level can be found, but today’s market is a buyer’s market,” Nexgen Capitals Equity Head Jagannadham Thunuguntla said.
In the backdrop of bearish capital market conditions this year, the IPOs of 2007 have reported wealth erosion across industry segments.
“More than 60 per cent of the value has eroded in the segments of auto, healthcare, manufacturing, media and real estate,” the report added.
There were 103 IPOs in 2007, of which 88 (85 per cent) were in loss and only 15 in profit. So far in 2008, IPO volumes have seen a drop to $4.23 billion, in comparison with last year when the IPO volume was $8.31 billion, indicating a YoY drop of 47 per cent.
