The ongoing turmoil in capital markets has been impacting IPO markets severely. The bad mood of capital markets haveled 25 companies to call-off their IPOs during this 2011 calendar year. The probable amount that these 25 companies wereplanning to raise was to an aggregate of Rs 31,000 Crores.
All these 25 companies had valid SEBI approval in hand for their IPOs. Even then, couldn’t open their IPOs within thevalidity period of one year from the date of SEBI approval.
Besides these companies, few companies have already announced IPO deferrals even though approval for SEBI validityfor their IPOs still remain. For instance, Micromax has already annoucned IPO deferral, owing to the market conditions.
Further, there are atleast 10 other companies who have valid SEBI approval in hand and are left with just 2 months in theirvalidity period of one year from the date of SEBI approval. Such companies include Pride Hotels, Tara Jewels, etc.
Further, this trend in IPO market will surely set panic in the minds of the Private Equity (PE) funds, as they will be unable toexit from their investments as they generally invest in unlisted companies in the hope of exiting through IPOs. Some suchcompanies are Lavasa Corporation (the investors were Axis Bank, ICICI Bank), BPTP Limited ( the investor was JP Morgan (through Harbour Victoria Investment), One97 communications (the investors were SAIF Partners, Intel Capita, Silicon ValleyBank, SAP Ventures), Micromax (the investors were TA Associates, Sequoia Capital India, Sandstone Capital, Madison IndiaCaital, You Broadband the investors was CVC, Avantha Power the investor was KKR, IND Barath Power the investors
This surely will impact the Indian corporate's ability in fund raising to finance their expansion projects resulting in slow downin capacity building and job creation.
Of these 25 companies, the list was largely featured with real estate companies and power companies. The list of realestate companies that called off IPOs include Lodha Developers, Ambiance Real Estate, Kumar Urban Developers, NeptuneDevelopers, BPTP, Raheja Universal and Lavasa Corporation. The list of power companies that called off IPOs includeSterlite Energy, Jindal Power, Avantha Power and IND Bharat Power Infra. Other major companies include Reliance Infratel,Glenmark Generics, Gujarat State Petro Corp, One97 Communications.
Jagannadham ThunuguntlaStrategist & Head of Research, SMC Global Securities LimitedContact Number: +91 9711424809
Prospectuses for which SEBI Clearance Received
CompanyApproval DateValid TillIndicative IPOsize(Rs. Crores)Status
1Reliance Infra Tel Limited11-Jan-1011-Jan-115000.00Expired2Lodha Developers Limited21-Jan-1020-Jan-112500.00Expired3AMR Constructions Limited29-Jan-1028-Jan-11145.28Expired4PNC Infratech Limited2-Feb-101-Feb-11175.00Expired5Ambiance Limited4-Feb-103-Feb-111293.00Expired6PCI Limited19-Feb-1018-Feb-1148.46Expired7Ankita Knitwear Limited26-Feb-1025-Feb-1125.00Expired8Glenmark Generics Limited8-Mar-107-Mar-11570.00Expired9Kabirdass Motor Company Limited9-Mar-108-Mar-1160.00Expired10Kumar Urban Development Limited22-Mar-1021-Mar-11320.00Expired
Further, the government's disinvestment program which was supposed to bring public issues of several blue-chip PSUscouldn’t take off. If the government is not getting enough confidence to bring FPO for ONGC, how will the promoters of anysmaller companies stick their necks out? This is surely impacting the confidence of the promoters of the smaller companies.
From the retail investors point of view, the long-awaited money-making IPO dream is remaining to be just a dream., , ,were CVC, Sequoia Capital, Bessemer Venture Partners, UTI Ventures) etc.