The Hindu Business Line : Wockhardt Hospitals pulls out IPO; refund in 15 days

After a jittery start in late January, Wockhardt Hospitals Ltd’s IPO eventually succumbed to the volatility in the stock markets. The hospitals major on Thursday officially withdrew its IPO due to feeble response from investors.

Wockhardt Hospitals’ IPO was subscribed 0.20 times, receiving 49,03,440 bids, on the day of the IPO’s closing. And “no comment” was all that Wockhardt Chairman, Mr Habil Khorakiwala, was willing to say, when queried by newspersons at a pharmaceutical conference earlier in the day.

A company statement, however, said that Wockhardt Hospitals had indeed decided not to proceed with its proposed IPO of 25,087,097 equity shares constituting 24.06 per cent of the proposed post-issue paid-up equity share capital of the company. “The decision not to proceed with the IPO was made in light of continued global and domestic market volatility and poor market sentiments and the resultant effect on the subscription levels in the IPO.”

All refunds would be completed within 15 days of the issue’s closing date, the note said.

Problems galore

Market uncertainty had worried Wockhardt Hospitals Ltd even as it had kicked-off its road-show in late January to publicise its IPO. The Chairman had then indicated that the company would review the dramatic movements in the market before taking an investor-friendly call.

On the eve of the IPO’s opening on January 31, the company reduced its price band to Rs 225-260, from the earlier Rs 280-310. This further took its toll on the IPO, with Day 1 not registering a single subscription due to a combination of delayed regulatory approval and technical system configuration issues at the stock exchange.

But that was not the end. The company then extended the IPO closing date by two days to February 7.

Wockhardt Hospitals was looking to mop up over Rs 800 crore to fund its expansion across the country through greenfield and brownfield projects (setting up hospitals in smaller cities).

‘Time to introspect’

But whether its IPO withdrawal was a casualty of bad timing, quality of the offer or advisers on the IPO not reading market signals correctly is something that Wockhardt and others operating in the market will have to introspect on, an analyst familiar with the development said.

Citigroup Global Markets India Pvt Ltd and Kotak Mahindra Capital Company Ltd were the joint global co-ordinators and book running lead managers to Wockhardt Hospitals’ IPO. The book-running lead managers to the issue are ICICI Securities Ltd and SBI Capital Markets Ltd.

Good issues will get good responses, points out the head of an investment bank.

Companies and investment bankers have to think of a more realistic way now to price issues as investors seem to have become selective about the issue they want to invest in, he added.

Pricing it high

A sub-broker with a brokerage points out that the parent company of Emaar-MGF — the Dubai-based Emaar — was listed on the Dubai Exchange at an equivalent of Rs 130. But the Emaar IPO’s price band in India was between Rs 610 and Rs 690 to start with.

“People definitely would’ve been aware of this fact, especially the FIIs. Why would they buy the stock here when they can get it in Dubai at a lower price?” he points out.

Lead mangers have to look at all these factors and fix a price band, he said.

IPOs are the first to get hit by weak local and global markets, said Mr Kaushal Sampat, Chief Operating Officer, Dun & Bradstreet Information Services India Pvt. Ltd.

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