Lull before the storm

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The last few weeks have been tough for companies contemplating initial public offerings (IPOs). The volatility in the stock markets has meant that promoters have been thinking twice about launching their IPOs in the current environment. For instance, companies like Acme Tele Power, Aishwarya Telecom, Gammon Infrastructure and Alkali Metals, whose plans for an IPO were cleared by the Securities and Exchange Board of India, have not announced the dates for the launch yet. Many see sense in holding their horses.

Says Deven Choksey, managing director, K R Choksey Securities, “I am not surprised if those who were contemplating IPOs would be holding on to their plans at the moment. It’s a game of wait and watch. Most would want the sentiment to ease out a bit.”

The fact that like Emaar MGF, SVEC Constructions and Wockhardt Hospitals had to call off their IPOs despite a few others scraping through is not helping either. For instance, issues such as IRB Infrastructure, Tulsi Extrusions, Shriram EPC, Bang Overseas and OnMobile Global, which came just before the above three, were fully subscribed, even over-subscribed, notwith- standing the weak market sentiment following the steep fall in the benchmark BSE Sensex and NSE Nifty on January 21 and 22, 2008.

What worked for them was the fact that they were not large issues. Most of them were in the region of about Rs 50-1,000 crore in size. Their price bands were not steep either, which meant that despite a liquidity crunch, investors were willing to spare some money for these issues.

Some of them like Bangalore-based OnMobile Global have an interesting story to tell. Says Sandhya Gupta, head, mergers & acquisitions, strategy & investment at OnMobile Global, “It was our fundamental growth story that pulled us through.” The Infosys-incubated company that provides voice and value-added services to telecom and media companies in 18 countries came out with a Rs 480-crore issue at a list price of Rs 440 per share.

She adds, “The fact that our issue came right after the January 21 and 22 market mayhem did make our investment bankers a bit nervous. But I was confident that we would be able to pull through the phase.”