IPOs go bust

The recent crash and subsequent volatility in the stock market has adversely affected IPO plans of India Inc. As many as 20 companies, which were planning to collectively raise Rs37.18bn have already deferred their IPOs. These companies are already holding approval from capital market regulator SEBI and are now waiting for better times to enter the market. This is as per the study done jointly by ASSOCHAM and Prime Database. These 20 companies include among others Acme Tele Power, Pride Hotels, Prince Foundations, Vascon Engineers and Xenitis Infotech.

"Plans of another 44 IPOs, collectively planning to raise Rs310bn, which are presently awaiting SEBI approval, may also be hit until the markets recover. These include the IPOs of Ashoka Buildcon, DB Corp, Future Ventures, Jaiprakash Power Ventures, JSW Energy, Mahindra Holidays, NHPC, Oil India and Reliance Infratel," says Prithvi Haldea, Co-Chairman of the Capital Markets Committee of ASSOCHAM. Haldea, however, adds that some of these 64 pending IPOs might still go ahead with their plans, though at reduced valuations, even in the present market conditions.

It may be mentioned here that at the beginning of the year, ASSOCHAM and Prime Database had estimated that, subject to stable secondary market conditions, the calendar 2008 would have seen mobilization of nearly Rs600bn through IPOs. The first three months of the year have seen 17 IPOs, totaling Rs149bn, and this amount may have been larger but for the crash in the secondary market in later part of January.