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Six companies have filed their draft red herring prospectus with the market regulator SEBI to raise funds through public issue since March. While another three filed prospectus with SEBI for rights issue. However, there are still miles to go for the IPO market to take off, opine market experts.
SEBI has sought clarifications from lead managers of UIC Udyog Ltd, Harisons Steel and Tristar Retail.
Rough patch
According to Mr Jaganandham Thunuguntla, Chief Strategist, SMS Global Securities, markets are in a rough patch, and only a few companies are turning to it for fund raising driving sentiment further down.
“The only trigger for the IPO market would be if the secondary market improves in terms of stability and buoyancy. This, in turn, would take a combination of factors such as growth, inflation control, policy action on behalf of the Government and international economic situation,” he added.
SEBI's move a dampener
The MCX IPO in March was oversubscribed 54 times. However, with no IPO since then to match its success, murmurs of a revival in the IPO pipeline have been silenced. “MCX IPO was a rarest of rare case in terms of the quality of the issue,” added Mr Thunuguntla.
SEBI's introduction of two new methods of raising finance in the stock markets — Institutional Placement Programme and the Offer for Sale — also did not quite enthuse the markets, believe market watchers.
“ONGC, Wipro and Godrej Properties did jump into the fray to raise money through offer for sale. This participation was driven by the need to comply with SEBI's latest norms on minimum public shareholding in public and private companies and not with the motive to raise funds,” he added
Mr Prithvi Haldea, Chairman and Managing Director, Prime Database, said there were three types of investors who would go ahead with launching IPOs in such a “dead market.”
They comprise of companies with good track record and future, companies that were desperate for money and willing to go ahead despite the bad valuations these days, and those companies that believe it is impossible to time the market and accept current market valuation.
“But there are very limited companies in these categories. So, what we have seen instead is some 30 to 40 IPOs getting postponed and no new large IPOs.
So, there is a huge pipeline and no dearth of issues and appetite. But, the level of confidence has to come back in terms of prices and market stability.
“We could see IPOs of PSUs in the next 3-4 months as these companies are anyway priced conservatively,” he felt.
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