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Wednesday, Jan 02, 2002

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All quiet on the IPO front

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MOBILISATION through the IPO route was a dismal Rs 392 crore in 2001, which is moderately higher than the mop-up in 1995 which stood at Rs 314 crore.

According to Prime Database, the year witnessed a significant decline of about 82 per cent over the Rs 2,165 crore mobilised in 2000. Only 15 companies tapped the capital market last year.

According to Mr Prithvi Haldea of Prime, ``Almost all IPOs failed to generate investors' interest.'' In fact, Globsyn Technologies and Ador Powerton had to refund the application money on their IPOs, having failed to mobilise the minimum 90 per cent subscription.

Besides the IPO of Andhra Bank which sold 2.72 times, other 12 IPOs managed just about one-time subscription in the 90-100 per cent range, suggesting the support of investors to pull the issues through.

Retail investors by and large stayed away from the market. In as many as 13 of the 15 IPOs, less than 3,000 investors each participated. After the crash of the Nasdaq, many scrips started trading below their offer price at the time of the IPOs. This led to the postponement of several issues.

While 11 companies tapped the primary market in the first quarter of 2001, only four IPOs hit the market in the last nine months. While 14 companies used the book-building route in 2000, just two companies — D-Link and Mid-Day Multimedia — used the route in 2001.

Prime Database said that the much-hyped Bharti Tele-Ventures issue ranging about Rs 1,200-1,800 crore could become a turning point for the revival of the primary market. ``Depending on the response to the Bharti IPO, and if the secondary market remains stable, there could be several companies which may then tap the market."

Several high profile companies which had proposed to tap the capital markets last year, did not do so. These include Tata Consultancy Services, NDTV, I-Flex Solutions, AB Corp, B4U, Kouni Travels and LG Electronics.

Companies such as Nimbus Communications, Godrej Sara Lee, Paras Pharmaceuticals, UTV and others received the SEBI approval, but did not hit the market.

``However, divestment through offerings to the retail investors is probably the most appropriate measure that could bring life to the moribund primary market,'' said Mr Haldea.

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