The Hindu Business Line : Turmoil in market takes toll on IPO mop-up

February issues
REC, the clear winner, received bids for 433 cr equity shares against 15.61 cr on offer
Tulsi Extrusions made a public issue of 57 lakh equity shares
GSS America made an issue of 34.97 lakh equity shares
V-Guard Industries raised Rs 65 cr from its issue

Moumita Bakshi Chatterjee

Advertisement

New Delhi, March 1 The turmoil in the market took a toll on the public issue mop-up with the Indian companies garnering about Rs 1,900 crore in February against Rs 4,500 crore notched in the year-ago period. While the February 2008 proceeds are a fraction of the January levels (Rs 12,500 crore), the January IPO pie was largely buoyed by IPO of Reliance Power.

During February 2008, four companies — Tulsi Extrusions, GSS America, V-Guard Industries and Rural Electrification Corp Ltd. (REC) — came out with public offers raising an aggregate Rs 1,890 crore, according to data compiled by Prime. Earlier in February, Wockhardt Hospitals and real estate firm Emaar MGF Land were forced to pull out their IPOs following a poor response triggered by volatility and weak market sentiments. The two companies were unable to overcome the negative sentiments, despite slashing the price band and even extending the IPO closing dates.

“With the market taking a hit, global cues going against the market, and investors finding the price to be aggressive, the retail investors had started shying away, but things are slowly falling back into place. If an issue is priced reasonably, investors will come back to the market,” Ernst & Young India’s IPO Leader, Mr R. Balachander said.

Offers made

The public offer by REC (Rs 1,639 crore) which was subscribed a total of 27.76 times across the price band, clearly dominated the IPO space during February. The issue received bids for 433 crore equity shares against the 15.61 crore equity shares on offer. Tulsi Extrusions, manufacturer of various types of PVC pipes and fabricated fittings, came out with a public issue of 57 lakh equity shares of Rs 10 each, during February 1-5, and the issue price was pegged at Rs 85.

GSS America, an IT solution provider specialising in infrastructure management services and enterprise application integration and IT consulting, entered the capital markets on February 11, with a public issue of 34.97 lakh equity shares through 100 per cent book building process in the price band of Rs 400-440. The company raised close to Rs 140 crore. Another company V-Guard Industries raised Rs 65 crore, by fixing its initial public offering’s issue price at Rs 82 per share.