Wockhardt Hospitals, Emaar MGF withdraw IPOs

Wockhardt Hospitals Ltd. decided not to proceed with its proposed initial public offering (IPO) due to lack of interest from all category of investors amid weak market sentiment. The decision not to proceed with the IPO was made in light of continued global and domestic market volatility and poor market sentiment and the resultant effect on the subscription levels in the primary market, Wockhardt Hospitals said. All refunds will be completed within 15 days of the issue closing Date, Feb 7. Wockhardt Hospitals also received a lukewarm response due to concerns on its high valuations vis-a-vis its listed peers like Apollo Hospitals and Fortis Healthcare. The issue appeared be doomed right from the start as the company slashed its price band on the eve of the IPO. Then, the IPO got delayed by one day due to lack of adequate regulatory approvals. Wockhardt Hospitals later extended the issue by to days, hoping to attract some subscriptions. But, despite all efforts on the part of the company's promoters, there were just no takers for the shares given its expensive pricing and tough market conditions.

A couple of other IPOs - Emaar MGF and SVEC Constructions - were also facing much difficulty in getting subscriptions. Emaar MGF cut its price band twice. First, from Rs610-690 per share to Rs540-630 a share, and then by trimmed the lower end of the price band by another Rs10, to Rs530 a share. The real estate firm also extended the time period of the public issue by five days to Feb. 11. It was initially slated to close on Feb. 7. Emaar MGF did receive better response, but eventually withdrew the issue on Friday, saying it will consider an IPO once the market stabilises. The company also said it will consider other funding options and that the failure of the IPO won't affect its proposed and current projects. Meanwhile, SVEC Constructions extended the time period for its public issue, till Feb. 13.

The events of the past couple of weeks in the primary market raises some serious questions. One, about the efficacy, transparency and fairness of the entire regulatory IPO process, especially for retail investors. Secondly, about the involvement of merchant bankers and promoters, some of who tend to demand valuations that are out of sync with market realities and pragmatism. Having said that, public memory is short, and a rising market all excesses are brushed under the carpet and people just go with the current trend. So, when the markets recover and start rallying again, we will once again have greedy promoters and their partners in crime - the i-bankers - to sell juicy stories to gullible investors.