The ongoing weakness in capital markets has hit IPO (initial public offer) markets severely. In 2011, IPOs worth R32,200-crore were cancelled by 28 companies. ?All these 28 companies had valid Sebi approval, even then they couldn?t open their IPOs within the validity period of one year from the date of Sebi approval, said Jagannadham Thunuguntla, strategist & head of research, SMC Global Securities.
Real estate and power companies were the worst hit. The list of real estate companies that called off IPOs include Lodha Developers, Ambiance Real Estate, Kumar Urban Developers, Neptune Developers, BPTP, Raheja Universal, and Lavasa Corporation. Power companies that called off IPOs include Sterlite Energy, Jindal Power, Avantha Power, and IND Bharat Power Infra.
Reliance Infratel, Glenmark Generics, Gujarat State Petro Corp, and One97 Communications are other major companies that cancelled their IPO plans due to weak market.
A few companies have deferred their public issues inspite of remaining Sebi validity for IPOs. For instance, Micromax has already announced IPO deferral, owing to the market conditions.
Further, there are atleast 8 other companies such as Pride Hotels and Tara Jewels which have valid Sebi approval in hand and are left with just 2 months in their validity period. Further, the government’s disinvestment programme which was supposed to bring public issues of several blue-chip PSUs couldn?t take off. The government has called off much anticipated FPOs of ONGC, Bhel, SAIL. This has also impacted the confidence of the public issue market in 2011.
The QIP (qualified institutional placement) market too virtually dried up in 2011. Threre were only 8 QIP issues this year far lower than 45 QIP issues in 2009 and 53 QIP issues 2010. According to Jagannadham, even in terms of amount of funds raised through QIP, the total amount during 2011 was only R3,451 crore.
