The jittery stock markets seem to have scared away another company set for an initial public offering. So even as the government hopes to restart its stalled disinvestment programme, the railway ministry run Rites, one of the public sector enterprises that has already been approved for a 28% stake sale, has decided to wait a while before coming out with its public offer.
The rail consultancy firm is of the view that market conditions are at present not good enough. ?We were planning to hit the market by November but with the current volatility, we have decided to wait a while,? a top official with Rites told FE.
If the market stabilises, the company may come out with its IPO by March 2009. The department of disinvestment officials confirmed to FE that Rites has conveyed the change in plans to them.
The Sensex has shed more than 30% this year, falling to its lowest level this year at 12,575.80 on 16 July. On Monday, it closed at 14,450.35.
The government in January this year had decided to offload 28% of its stake in the railway PSU. Of the total 14 million shares, 10 million shares would comprise of fresh issues while the government would also sell off 4 million of its shares.
While the company has so far not specified the size of the issue, sources said it could raise up to Rs 350 crore through the offer. The funds would be used for leasing rail equipment for projects in African countries. It had also filed a draft red herring prospectus with Securities and Exchange Board of India in April this year, but it has now lapsed.
Rites decision to go easy on its divestment plans comes at a time when two other PSUs hydel major NHPC and Oil India Ltd are targeting October and November respectively for their IPOs.
The railway PSU however said that it can afford to go easy as its immediate fund requirements have been fulfilled. The company expects about RS 160 crore in dues to be paid by October from an earlier consultancy in Iraq . ?We are cash-rich and a zero-debt company, so funds are not really an issue,? the official said.