Search the Internet          Tips  Sites: Finance, Investment

New issues touch seven-year low

BS Research Bureau

The mobilisation of funds through initial public offerings in 2001 has been the lowest in the last seven years, with 16 companies mobilising a paltry Rs 4.09 billion.

The figure is 86.6 per cent lower than the mop-up in 2000, when 128 companies raised Rs 30.55 billion. Only three IPOs hit the capital market between May and December 2001.

Analysts attribute this to the bearishness that gripped the stock markets immediately after the Union Budget 2001-02 was announced.

The dearth of funds in the capital market is clearly reflected in the fact that 59.4 per cent (Rs 2.43 billion) of the total funds mobilised through IPOs came from just three issues -- Andhra Bank, D-Link India and Mid-day Multimedia.

Ador Powertron, City Online Services, Datum Technologies, E Star Infotech, Globsyn Technologies, IKF Technologies, IMAP Technologies, IQ Infotech, Moschip Semiconductor Technology, Moving Picture Company, Sequelsoft, SMR Universal Softech and South Asian Petrochem collectively raised the remaining Rs 1.66 billion.

The sluggish market conditions led most companies to postpone their plans to raise funds. Thirty-two companies filed offer documents with the Securities and Exchange Board of India to mobilise Rs 31.67 billion during the year. However, not a single one went ahead to float.

The Punjab National Bank (Rs 3.20 billion), UTV Software (Rs 1 billion), Applitech solution (Rs 980 million), Ban Labs (Rs 270 million) and Manipal Media (Rs 350 million) were among companies that deferred their IPOs.

The promoters of Nimbus Communications (who had a Rs 1.35 billion IPO plan), Mahindra British Telecom (Rs 1 billion IPO plan), St Angelo's Computer (Rs 450 million IPO plan) and Gurukul Technologies (Rs 50-million IPO plan) withdrew their offer documents.

The year 1995 remains the best for IPOs when 1,444 issues raised a whopping Rs 138.87 billion. In 1996, the mobilisation was Rs 57.33 billion from 1,169 issues, and in 1997, Rs 21.82 billion was raised from 125 issues.

In 1998, the number of issues plummeted substantially to 19, accounting for just Rs 3.65 billion, while in 1999, 38 companies raised Rs 22.37 billion.

The Central Bank of India, Punjab and Sind Bank, United Bank of India, Canara Bank, Sony Entertainment Television, Birla-Tata-AT&T and NDTV are among companies that have lined up IPOs during 2002. These floats, however, are subject to market conditions.

Powered by

YOU MAY ALSO WANT TO READ:
2001: The Year That Was…
The Rediff-Business Standard Special
The Budget 2001-2002 Special
Money
Business News

Tell us what you think of this report