Having tried unsuccessfully in 2008,over three dozen firms are holding back IPO plans to raise an estimated Rs 75,000 crore (over 15 billion dollars) for the right market conditions,which experts believe is unlikely before the year-end.
The overall size of the IPO backlog from 2008 is incidentally more than four times of the total amount raised during the year through this route and almost equals the cumulative capital raised over the past three years.
The slackening in the primary market was primarily due to the poor response to the post-IPO listings in the secondary market and the slump in the investors’ sentiments due to overall sluggish market conditions,the experts said.
The weakness in the market led to deferment of IPO plans by close to 40 companies,who were collectively seeking to raise about Rs 75,000 crore.
Brokerage firm Bonanza Portfolio’ President Research P K Aggarwal said that the revival of IPO scene in 2009 seem to be a remote possibility.
I believe the primary market may rebound by 2010 or even 2011 and this year the scene may remain dormant, Aggarwal added. During 2008,the primary market saw mobilisation of Rs 16,927 crore through both initial and follow-on public offers (IPO and FPOs),wherein the IPO of Anil Ambani groups Reliance Power alone contributed more than Rs 11,500 crore.
According to primary market tracking firm Prime,as many as 37 companies which were planning to mop up about Rs 29,164 crore through IPOs had deferred their plans to enter the market in 2008 because of adverse market conditions.