IPOs hit a nadir with 7 issues in first quarter

Duirbng teh first quarter, only the J&K Bank issue received a good response, which indicates that investors today are cautious against all and sundry issues and areon the look out for safe bets. No wonder, despite a number of bank issues hitting the primary market in the last one year, rthe investor appetite for bank scrips has remained unsatiated. J&K had tapped the market with a Rs 70 crore issue in May this year with a permium of Rs 28. The issue was oversubscribed 2.1 times.

A combination of factors including investors’ apathy consequent to the phenomenal losses on investments in the primary market, over-stringent entry barrier and lack of severe punishment to errant promoters has led to this state of affairs.

While the primary market for equity issues continues to be in limbo, debt issues continue to dominate the market, cornering 71 per cent of teh mobilisation. Public issues accounted for a 61 per cent mobilisation in 1997-98, up from 25 per cent in 1995-96.

The absence of investors’ faith on promoters and the consequent fall in the number of equity issues has had a direct bearing on the industrial growht. This is evident by the aggregate costs of projectsfinanced through public issues. This has declined from Rs 1973 crore in 1997-98 to Rs 423 crore during the first quarter of 1998-99. Th decline druing the year doesnot augur well for the economy – from Rs 38182 crore in 1994-95 to Rs 6952 crore in 1996-97.