IPO investors get returns gift
Investors who bet their money on initial public offerings during the heady days of the 2007-08 bull market can heave a sigh of relief. Private equity investors may be back
By Vijay Gurav, ET Bureau |
MUMBAI: Most investors who bet their money on initial public offerings during the heady days of the 2007-08 bull market can heave a sigh of relief. The near 80% rally in key indices since March has translated into even bigger gains in the broader market, with the result that many of the recent listings are trading way above their issue prices.
Cairn India, Mundra Port, Power Grid Corporation, Power Finance Corporation, Religare Enterprises and Orbit Corporation are a few notable examples where the shares are quoting at a premium of 39% to 162% over their respective offer prices. This has raised hopes that the IPO market will be buzzing with activity once again.
���The sharp gains in IPOs reflect investors��� renewed confidence in the respective companies. Some of them are fundamentally sound companies, which had been beaten down way below their intrinsic value,��� said a merchant banker on condition of anonymity. However, investors should exercise caution while taking call on those newly-listed companies, which do not have any proven track record, said the banker. But some bankers feel it is too early to call a revival in the primary market.
���PSU divestment would kick off the IPO market. However, fund-seeking companies and investors would wait for the market to stabilise, which will depend on many factors such as corporate earnings, monsoon, UPA���s Budget and global economic conditions,��� said Mumbai-based merchant banker Saffron Capital Advisors MD K Srinivas. The primary market may start looking up from mid-July by when some clarity would emerge on earnings outlook, government���s reform agenda and global scenario, he added.
In terms of percentage rise over the offer price, Alkali Metals topped the list with a gain of 239%, followed by Shree Ashtavinayak Cine Vision and Religare Enterprises, with the figures of 237% and 162%, respectively. The list also includes a relatively large-sized company Cairn India, which was languishing below the offer price of Rs 160 for a long time after its listing. The stock climbed 6% to Rs 231 on Friday, recording a 44% rise over the offer price.
Cairn India, Mundra Port, Power Grid Corporation, Power Finance Corporation, Religare Enterprises and Orbit Corporation are a few notable examples where the shares are quoting at a premium of 39% to 162% over their respective offer prices. This has raised hopes that the IPO market will be buzzing with activity once again.
���The sharp gains in IPOs reflect investors��� renewed confidence in the respective companies. Some of them are fundamentally sound companies, which had been beaten down way below their intrinsic value,��� said a merchant banker on condition of anonymity. However, investors should exercise caution while taking call on those newly-listed companies, which do not have any proven track record, said the banker. But some bankers feel it is too early to call a revival in the primary market.
���PSU divestment would kick off the IPO market. However, fund-seeking companies and investors would wait for the market to stabilise, which will depend on many factors such as corporate earnings, monsoon, UPA���s Budget and global economic conditions,��� said Mumbai-based merchant banker Saffron Capital Advisors MD K Srinivas. The primary market may start looking up from mid-July by when some clarity would emerge on earnings outlook, government���s reform agenda and global scenario, he added.
In terms of percentage rise over the offer price, Alkali Metals topped the list with a gain of 239%, followed by Shree Ashtavinayak Cine Vision and Religare Enterprises, with the figures of 237% and 162%, respectively. The list also includes a relatively large-sized company Cairn India, which was languishing below the offer price of Rs 160 for a long time after its listing. The stock climbed 6% to Rs 231 on Friday, recording a 44% rise over the offer price.
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