New Delhi:Owing to a sluggish trend in stock markets, at least 22 companies, mainly from real estate and power sector, have called off their initial public offers (IPOs) in this fiscal, a report has said.
“The bad mood of the capital market have led 22 companies to call off their IPOs during this fiscal. Even after getting approval from market regulator SEBI, these companies could not open their IPOs within the valid period of one year from the date of approval due to the ongoing turmoil in the capital markets,” SMC Global Securities said in a report.
Among the 22 companies that cancelled their IPOs, a host of them belong to power and real estate sectors, including Sterlite Energy, Jindal Power, Avantha Power, Lodha Developers , Ambiance Real Estate, Kumar Urban Developers, Neptune Developers, BPTP and Raheja Universal.
Fearing that the trend will impact corporates’ ability to raise funds to finance their expansion projects, the report said this may result in a slowdown in their capacity building and job creation.
SMC noted that the trend in the IPO market may set panic in the mind of the private equity (PE) funds, unable to exit from their investments.
PE funds generally invest in promising but unlisted companies in the hope of a later exit through IPOs.
Some companies also announced IPO deferrals, including One97 communications and Micromax, owing to the volatile market conditions, the report highlighted.
Lodha Developers’ Rs 2,500-crore IPO could not meet its opening deadline of January 20, 2011 and thus expired.
In tandem with volatile investor sentiment, two companies Greatship (India) and IND-Barath Power Infra, whose IPO is to open for subscription this week may not hit the capital market, the report said.
The BSE benchmark Sensex has plummeted by over 21 per cent in the year so far and touched a 52-week low of 15,765.53 on August 26.