Safety net not a good idea for equity instruments

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Ashish Rukhaiyar: Feb 19 2013, 00:30 IST

Companies have again started looking at initial public offerings (IPOs), but it will take some time before the issues are actually launched, says Sanjay Sharma, managing director, equity capital markets, India corporate and investment banking, Deutsche Bank. In an interview with Ashish Rukhaiyar, Sharma says the near future will be dominated by OFS to comply with regulatory requirements and that safety net is not a good idea for equity instruments. Excerpts

Can we say that the IPO market is showing signs of recovery?

The markets are better than last year, but, I think, the companies are still not in a state of readiness to raise funds from the primary market. Last year, we saw secondary market blocks dominate, which does not require much of a lead time.

In the first half of this year, QIPs, blocks and OFS will dominate. As regards IPOs, corporates have started discussing IPO plans and, we believe, they will hit the market in the second half of the calendar year.

Even if you look at QIPs, the companies with enabling resolutions are far and few. Another important aspect is that investors have become very selective. So, when we say that the market is back, it is back only for quality companies and well-priced ones.

Are companies now sure of going ahead with their IPO plans?

If you look at companies going ahead with their capex plans, the trend is limited to a few sectors and it is not across the board. It will take some lead

... contd.

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