Promoters Get Cold Feet About Ipos

Promoters Get Cold Feet About Ipos
The Telegraph, Mumbai, August 30, 2009

Equity investors hoping to subscribe to IPOs may have to wait for some time. Promoters are reluctant to test the market’s appetite for new stocks, though shares have rallied upwards on the back of good liquidity, while there has been a strong buzz around IPOs (initial public offerings).

According to Prime Database, 13 companies — mainly mid-cap firms — have received Sebi’s approval as early as September last year for public floats aggregating over Rs 2,000 crore.

Another 21 companies have filed offer documents and are awaiting for their proposals — worth over Rs 8,000 crore — to be cleared. These include the offerings of power companies such as JSW Energy and Indiabulls Power.

“We are seeing IPOs at the rate of one a month. Companies are still nervous, thanks to the volatile markets, and fear that they will not be able to get the right price. They are waiting for a reasonable period of stability in the markets,” said Prithvi Haldea, chairman and managing director of Prime Database, a private agency that tracks IPOs.

“While the 30-share BSE sensex has shot up from 9903 points on January 1 to 15922 points on August 28, 2009, this has been accompanied by increased intra- and inter-day volatility. The market is making swings of 5-10 percent on the upside and downside,” said a trader with a leading Mumbai-based brokerage.

Godrej Properties, which received approval in June for a Rs 600-crore issue, may launch its IPO in the next couple of months.

“We are looking at the IPO seriously now. The markets show signs of stability, but I can’t really commit myself on whether we will launch the issue in the next three months,” Milind Korde, executive director and president of Godrej Properties, said.

Analysts said an IPO rush was unlikely for some time, though private firms are very keen. A recent offering by Adani Power was oversubscribed 20 times — the retail subscription was much lower — and is trading 4 percent above its listing price.