Fund flows

Foreigners:  Foreign institutional investors were net sellers of stocks (Rs1,996.48 crore). They...

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Market turmoil: 50 IPOs worth Rs40,000 crore did not materialise since January 2011

Many companies, including Reliance Infratel, Jindal Power and Lavasa Corp, which secured approval from SEBI, could not open their IPOs within the validity period of one year

 

The economic situation across the globe is grim and turmoil in stock, forex and commodities market is having disastrous consequences on corporate fund raising plans. Owing to the downtrend in the markets, about 50 companies, including big names like Reliance Infratel, Jindal Power and Lavasa Corp, could not dare to enter the capital markets despite securing clearance from the market regulator.

According to a research note by SMC Global Securities, since 1 January 2011, 50 initial public offerings (IPOs) that were supposed to raise around Rs40,326 crore, failed to materialise. "This surely will impact the Indian corporates' ability in fund raising to finance their expansion projects resulting in slow down in capacity building and job creation," said Jagannadham Thunuguntla, head of research at SMC.

During 2011, 29 companies which were planning to raise about Rs32,000 crore from the markets, called off their IPOs owing to difficult market conditions.

Even during 2012, 17 IPOs, worth Rs5,928 crore were called off. These include Micromax, Embassy Property, Joyalukkas, Lokmat Media, VRL Logistics, Aravali Infrapower and Semantic Space Technologies.

Since January 2011, four companies-Samvardhana Motherson, Goodwill Hospitals, Plastene, Galaxy Surfacants-which were planning to raise about Rs2,000 crore from the markets had to withdraw their offering due to poor response.

 
In addition, the government's disinvestment programme, which was supposed to bring issues of several blue-chip public sector units (PSUs), could not take off. The recent lukewarm response to the ONGC auction also impacted the confidence of the public issue market. In March, Life Insurance Corporation of India (LIC), bought around 40 crore shares, or about 95% of the total auctioned shares, by paying over Rs12,000 crore, in a face-saving effort for the government.

 

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COMMENTS

AB

5 years ago

Thank God for the small mercies! How many million ordinary people saved from yet another bad experience!

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