Volatile markets leave future IPOs in limbo
Volatile mkts are giving heebie-jeebies to promoters looking to raise funds through IPOs. Stocks to watch | Heard on the Street | Gainers & Losers | All Headlines
MUMBAI: Volatile markets are giving the heebie-jeebies to promoters looking to raise funds through initial public offerings (IPOs). The fate of several proposed public issues looking to collectively raise Rs 10,000 crore is in limbo.
Among large companies, UTI MF is reported to have deferred its plans to go public.
More recently, Birla Cotsyn had extended the date for accepting bids, and also lowered its price band. However, few companies have gone ahead with their fund-raising plans despite poor market conditions. Market participants say it will be tough time going ahead for these companies and merchant bankers to raise funds.
���It is certainly not a good time for IPOs,��� says PK Agarwal, president of Bonanza Portfolio. ���When good listed companies are not finding any major buying interest, why would anybody go in for unlisted companies without a proven track record. Secondly, pricing will remain a major issue,��� he says.
Birla Cotsyn had extended its IPO till July 9. Earlier, the issue had been slated to close on July 4. The company also had to lower its price band from Rs 12-14 per share from Rs 15-18 earlier.
���From what we see, promoters have begun extending or deferring their expansion plans in the wake of weak market sentiment,��� says Centrum Capital investment banking head Mayank Dalal.
Companies such as MCX India, Reliance Infratel, Mahindra Holidays and Resorts are yet to proceed with their planned IPOs, despite having got the clearance from Sebi.
Among large companies, UTI MF is reported to have deferred its plans to go public.
More recently, Birla Cotsyn had extended the date for accepting bids, and also lowered its price band. However, few companies have gone ahead with their fund-raising plans despite poor market conditions. Market participants say it will be tough time going ahead for these companies and merchant bankers to raise funds.
���It is certainly not a good time for IPOs,��� says PK Agarwal, president of Bonanza Portfolio. ���When good listed companies are not finding any major buying interest, why would anybody go in for unlisted companies without a proven track record. Secondly, pricing will remain a major issue,��� he says.
Birla Cotsyn had extended its IPO till July 9. Earlier, the issue had been slated to close on July 4. The company also had to lower its price band from Rs 12-14 per share from Rs 15-18 earlier.
���From what we see, promoters have begun extending or deferring their expansion plans in the wake of weak market sentiment,��� says Centrum Capital investment banking head Mayank Dalal.
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���Some of them are looking to rope in private equity players to meet immediate fund requirements. Only promoters who are in dire need of capital may go in for a public issue in these markets,��� he says. Companies such as MCX India, Reliance Infratel, Mahindra Holidays and Resorts are yet to proceed with their planned IPOs, despite having got the clearance from Sebi.
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Mr Agarwal further says, investors are wary of putting their money in IPOs at this point of time. This has also to do with the quality of some of the issues that had hit the market in the past few months.
���At the peak of the bull run, the quality of issues goes down and investors suffer. It takes a lot of time for investor sentiment to improve. I think the companies should look for alternate means for raising money for growth,��� he adds.
But the situation may not be as bad as it was in 2001, when several IPOs had to be withdrawn, and quite a few, permanently.
���We do not expect several issues to get deferred this time round. From what we see, 80-90% promoters would refile their documents when secondary market move up and stabilises,��� said Prime Database managing director Prithvi Haldea.
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