Market conditions not good for IPO’s
Posted on December 3, 2008
Filed Under IPO news & discussion, Market News & Discussions |
Not only US but world is in financial crisis. We are seeing job cuts all over and all the governments are feeling the pressure to support the financial institutions of the respective countries. People are fearing stock investments and hence this is a bad time for new IPO’s where the public is itself worried about it’s prior investments there is very little chance any one will be interested in fresh investments that too in the form of Initial Public Offerings.“Conditions are extremely non-conducive for IPOs of any reasonable size. Only those companies, which cannot abandon their projects midway will be seen making IPOs in the current market,” said Mumbai-based merchant banking firm Saffron Capital Advisors’ MD K Srinivas. Primary market conditions will continue to be dull until there is some improvement in valuations in the secondary market, he says.
According to data collated by Delhi-based research firm Prime Database, a dozen companies have received approval of Sebi to raise over Rs 13,000 crore. Of these, Future Ventures and Adani Power — the two large-sized issues with a combined size of Rs 8,300 crore — are understood to have received the regulatory nod in early September. Given that the validity period of Sebi’s approval is 90 days, bankers feel the two companies and others, which got approval around the same time may have to put their offers on hold and wait till market conditions improve.
I hope you remember the two IPO’s of Emaar MGF (size Rs 5,436 crore) and Wockhardt Hospitals (Rs 564 crore) were withdrawn after poor initial response. Stay away from the IPO’s till the conditions in secondary market improves and India once again sees good FII investments.
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