MAY 26: As many as 64 companies, including 54 ICE companies, which had applied to the market regulator Securities and Exchange Board of India (SEBI) for initial public offerings (IPOs) have indefinitely postponed their fund raising plans. The massive battering in ICE stocks listed on the stock exchanges has forced IPO issuers to go into hibernation.These companies, which had already done the initial spadework to cash in on the ``infotech boom'' were planning to raise around Rs 500-750 crore from the primary market. ``I don't think some of the infotech and media companies who have received the SEBI permission will be able to come out with IPOs in the future. They wanted to exploit the boom. now that the valuations of existing infotech and media companies have come down by over 70 per cent, investors are not ready for fresh investment in such companies,'' said a merchant banker.Merchant bankers say that another 40 odd companies which had planned IPOs have now decided not to approach the SEBI for submitting the IPO documents as the turbulence in infotech, telecom and media counters is continuing without any let-up.Investors are also upset with the performance of some of the recent IPOs of the stock markets. Stocks of newly listed infotech and media companies like Cinevista, KPIT Systems and Zenith Infotech have fallen below their offer prices, puncturing the confidence of investors in new issues. KPIT Systems which issued shares at Rs 90 is now quoting at Rs 81, Zenith is trading at Rs 70 as against the offer price of Rs 110 and Cinevista at Rs 234 as against Rs 300.Many of these companies raised funds at a huge premium exploiting the lax IPO guidelines. The book-building route was systematically ``used'' by the companies to collect the maximum premium from investors. ``The fall in ICE stocks like Infosys, Satyam, NIIT, Wipro and Silverline in the last two months has upset the plans of promoters to launch IPOs. Investors will not touch IPOs of infotech companies in the near future,'' said an analyst.Infosys has fallen from Rs 13,000 to Rs 6,000, Satyam from Rs 7,500 to Rs 2,181 and Wipro from Rs 9,600 to Rs 1,600. Promoters - mostly newcomers - planned IPOs after seeing the boom in ICE companies in the January-March period. It is not surprising that most of the companies in the list of 54 infotech/media IPOs are unknown to investors.Many dotcom companies have also sprung up without any definite idea of a revenue model and they all want to get high valuations and IPO. Technology stocks all round the world, especially on the Nasdaq market of the US, have been falling heavily and it is not clear whether they have bottomed out. ``In India, it's still not clear whether ICE stocks have reached their right valuations. So where is the question of launching a new issue now?'' asks BSE dealer Pawan Dharnidharka.Moreover, it is unlikely that investors will easily forget the battering that they got in infotech and media shares in the last two months. ICE stocks have contributed mostly to the steep fall of Rs 3,50,000 crore in market capitalisation. Many NBFCs which recently changed their names to reflect software business are also disappointed as they are unable to float the IPOs now.
