"Out of the 18 IPOs launched in 2008, 13 were trading at a discount last week implying losses to investors of about a quarter of the total IPO amount. I think, it must be larger," Finance Secretary D Subbarao said at a seminar on Securities Contracts (Regulation) Rules here.
If the situation continues, it would be increasingly difficult for corporates to raise money from the capital market, he said.
The Finance Secretary attributed weak sentiment in the market to increasing risk-aversion among investors. "The stock market provided 15 billion dollars in 2007 to support investments of firms. But, as global risk aversion has risen in the past few months, this has dented investors sentiments in India too," he added.
Of the total IPOs listed on stock exchanges this year, 11 companies had an issue price above Rs 100. The aggressive pricing of the IPOs have led the companies to lose substantially being unable to sustain the prices in long-term.
In fact, Reliance Power launched with much fanfare, closed at Rs 372.50 on the opening day, much below its offer price of Rs 450 a share, forcing the company to issue three bonus shares for every five held by non-promoters.
However, state-run Rural Electrification Corporation was trading higher at Rs 109.05 against its issue price of Rs 105 and GSS America at Rs 640.85 against an issue price of Rs 400.
The bearish sentiments in the market has led to 13 firms witnessing red in the market. The Sensex, which opened above 20,300 points in January, has dipped 4,000 points to about 16,400 points since then till yesterday.