The Hindu Business Line : IPOs lose sheen as market sentiments evoke caution

The rush by companies to come out with public issues seen in the beginning of the year seems to have petered out in the wake of turbulent market sentiments.

As against a total of 41 public issues (all instruments, including equity, hybrid and debt) between January and March 2006, the subsequent five months have seen a drying up of public floats with a much lower tally of 22 issues coming into the market during the period.

Of the total Rs 14,155.59 crore raised till August during the first eight months of the current calendar year, over half the amount was raised during the first three months alone. The 41 public issues raised a cumulative Rs 7,525.82 crore during January-March this year. During the year 2005, there were a comparatively lower number of public issues in the first three months at 16, according to figures compiled by Prime Database. According to analysts tracking the primary market, the dip in the initial euphoria was mainly on account of the vacillating market indices since March. Also, with several mega public issues, including the proposed DLF Ltd issue that was to come in the middle of the current financial year, and others like Power Finance Corporation (PFC) and Neyvelli Lignite Corporation (NLC), having been put off on account of various reasons, overall market sentiment has been dented quite a bit.

In addition, several recent high profile public issues such as the Reliance Petroleum, Punj Lloyd, PVR Ltd. and Plethico Pharmaceuticals issues dipped below their respective issue prices, while in the case of issues such as Deccan Aviation, the book managers had difficulty getting full subscription. All of these reasons have prompted promoters to delay their plans to enter the markets during the second half of the year, analysts said.

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