Poor market conditions have certainly impacted the primary markets as 12 initial public offering (IPOs) worth Rs 5,461 crore have been called off in 2012 so far, reports SMC Global. This is expected to have an impact on corporate India as it could affect their ability to finance their expansion projects resulting in slow down in capacity building and job creation.
"The broad reason for this performance could be the lack of confidence and conviction on equity markets amongst investors ", Jagannadham Thunuguntla, Head of Research, SMC Global told Firstpost.
Many companies like Micromax, Embassy Property, Joyalukkas, Lokmat Media had the valid SEBI approval for their respective IPOs but could not open the issue within the one year SEBI specified date.
Lack of investors sentiment was also seen in the luke warm response to the ONGC auction in the month of March. In fact, the government of India had to call in the Life Insurance Corporation of India (LIC) to pick up a 4.401 percent of the 5 percent stake offered.
Raising funds from the primary experts has become difficult and this trend could continue for some time. "The recent political developments and policy making slowdown indicate that it may take considerable time for the IPO market to come back. That will depend on the global liquidity and secondary market conditions ", he added.
In 2012, only two companies have raised funds via the IPO route. This includes the likes of BCB Finance and Multi Commodity Exchange (MCX). Of this, the issue of MCX was well received by investors as it was subscribed by 54 times (On the day of listing, the stock galloped by 37 percent).
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Updated Date: Dec 20, 2014 17:16:17 IST