Government Holds Oil India Postpones IPO To Next Fiscal - Dec 23, 2008

Initial Public Offer of Oil India Ltd has been put off to the next fiscal on account of unstable market conditions. The nation's second biggest state-run oil and gas explorer was to launch its IPO of 2.64 crore equity shares on November 10 as per the earlier schedule. However, the turnaround of fortunes on the stock markets led to its deferment by a few weeks. It now has been put back for at least a couple of months.

According to the OIL Director (Finance) S Ananthkumar, Market is volatile and conditions bad for an IPO. We do not think we can go ahead with the plans under such a scenario. We are closely watching the market conditions. Whenever it appears that the market has stabilized, we will launch it. OIL has capital market regulator SEBI's approval, valid till September 10, 2009. IPO timing will have to be reworked in consultations with the government.

The government holds 98.13 per cent stake in OIL, which produces nearly four million tonnes of crude oil yearly. Together with the IPO, government is to sell 10 per cent of its current holdings in OIL to Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum.

IPO Activity In May Lose Steam Witnessed A Dramatic Fall In Volume - Dec 22, 2008

New Delhi: Initial public offerings, which had been the stars in the bull market last year have lost their attraction this year and are likely to face bleak days ahead in 2009. Dalal Street, which saw a mega offering by Anil Ambani Group firm Reliance Power hitting the capital markets this year, fell prey to the bears with the benchmark index Sensex plunging by over 10,000 points from its peak in January. IPO activity in 2008 witnessed a dramatic fall in volume, which declined nearly 51 per cent to around Rs 19,360 crore this year as against nearly Rs 40,000 crore at the end of 2007, as per data compiled by NexGen Capitals, the merchant-banking arm of brokerage firm SMC Global Securities.

However, the decline in volume would have been sharper if Reliance Power's mega offering of close to Rs 12,000 crore is excluded from the IPOs in 2008 (till December 10).Analysing the sharp downturn in the primary markets due to the bearish trends in the secondary market, most experts believe 2009 would be a difficult year and prospects for new issues remain weak. Echoing the sentiment, global consultancy KPMG's head of the private equity department, Vikram Uttamsingh, said the meltdown in the stock markets has led to dwindling offers in the primary market, which would be more pronounced in the coming year.

Mandatory Ipo Grading Will Continue The Compulsory - Dec 18, 2008

Security and Exchange Board of India (SEBI), has decided to continue the compulsory grading of IPOs. Earlier, it was determined that the decision would be reviewed as per the experience gained. There were doubts on the significance of the present system as the grading does not reflect in the performance of these issues in the markets.

According to a source, they have decided to maintain a status quo that is to continue to have a mandatory grading for IPOs. As per the members of the Primary Market Advisory Committee (PMAC), the decision is taken as it is too early to come to a conclusion on the effectiveness of the present policy of mandatory IPO grading.

However, many analysts believe that mandatory grading requires modification since grading does not reflect in the performance of issues in the market.SEBI had made grading mandatory for all IPOs where draft offer documents filed with the regulator on or after May 1, 2007, and made issuers accountable for the cost of grading. After that, about 100 IPOs have been graded by credit rating agencies.

Public Gain Loss Ratio Of Ipos In Last 5 Years At 1:4 - Dec 15, 2008

Initial public offerings (IPOs) ratio of gain-loss stood at 1:4 in last 5 years as analysis of 257 IPOs, which were launched during the last five years, showed that investors have lost money in the 204, while in balance 53 investors are still in the profit. This is despite the current turmoil in the market, which has shaved about 55% off the BSE Sensex in the last 11 months.

The IPOs showing profit are Educomp Solutions and Indiabulls Financial Services, which have given over 1,000% return since their respective IPOs, after adjusting for bonus, split, demerger of businesses etc. Apart from these two, there are nine stocks, which have at least doubled investors' money since IPO.

Gemini Engi Fab Ltd Files Draft Red Prospectus For IPO - Dec 12, 2008

Gemini Engi-Fab Ltd, a Mumbai based manufacturer of industrial fabrication related products has filed a draft red herring prospectus with SEBI for an initial public offering of 55 lacs equity shares of Rs 10 each. The price will be decided through 100 per cent book-building process. The shares will be listed on BSE and NSE.

The issue comprises of a net issue of 27.5 lacs shares of Rs 10 each to public, out of which 5 per cent that is 1,37,500 shares will be allocated to mutual funds and remaining will be allotted to qualified intuitional buyers. Almondz Global Securities is appointed as a book running lead manager and Karvy Computershare as registrar to the issue.

The company wants fund to set up a new manufacturing unit at Umbergaon, Gujarat. This facility would have better machinery like a plate bending machine, a tube sheet drilling machine, SAW machines with motorized rotators and electrically operated cranes which will not only help to handle larger material but also to work on it with better precision. This facility would also handle more equipment with a larger work space.

IPO Validity Extended From Three Months To One Year - Dec 11, 2008

SEBI on December 04 granted bigger flexibility to corporates for their fund-raising plans and also outlined measures to prevent the panic redemptions. Market regulator has approved a proposal to extend the validity of an initial public offering (IPO) approval from three months to one year, on requests from issuers. According to the prior rule, companies had to launch their IPOs within three months of securing SEBI's approval. For any reason failure to complete the offering would have meant approaching the SEBI for a new approval.

For many companies the new rule brings great relief, who were earlier forced to defer their IPOs even after obtaining SEBI approval. Under the new rule, these companies can go public within one year of receiving the regulator's approval. However, SEBI has also specified that companies will have to update the document with fresh numbers and any other material changes whenever required.

Govt Wants To Complete Due Diligence For IPO Launch - Dec 11, 2008

The Department of Disinvestment (DoD) has instructed public sector undertakings (PSUs), looking to raise funds from the capital market, to sort out administrative issues and complete their due diligence processes. In order to ensure that time structure to make offer in the capital market, will not clash with each other, the department will specify a time frame for each company.

According to a senior DoD official, "We're ready with IPOs of Oil India and National Hydroelectric Power (NHPC). The other PSUs have been directed to expedite their due diligence process so that they do not face any hitch while filing the red herring prospectus (RHP) with the Securities & Exchange Board of India (Sebi). This will help in streamlining the whole process and determining which PSU should be allowed to tap the market first.The government also wants PSUs and their administrative ministries to solve differences with employees to ensure that there is no difficulty during filing the prospectus.

Fortune Of Prospects Large Ipos Are Uncertain - Nov 27, 2008

Fortune of large-sized initial public offerings (IPO) like Adani Power and Future Ventures, India hangs in balance due to the current market turmoil. The proposed IPOs by these companies to rise over Rs 8,000 crore are likely to be postponed, according to some merchant bankers, as the validity of Sebi's approval to the offers, would end in the next few weeks.According to Mr K Srinivas, MD Mumbai-based merchant banking firm Saffron Capital Advisors.

Conditions are extremely non-conducive for IPOs of any reasonable size. Only those companies, which cannot abandon their projects in the middle, will make IPOs in the current market. Primary market conditions will continue to be dull until there is some improvement in valuations in the secondary market.

In the recent past failures of a few high-profile offers are forcing prospective issuers to take a cautious approach on the primary market, according to the bankers. Even after receiving clearance from Sebi, most of them are unwilling to proceed with their offers due to fears that investors may not respond positively.

Exceedingly bearish secondary market conditions with no sign of recovery since January this year has caused a major hit for fund mobilization through equity public issues. Around Rs 17,000 crore (38 issues) has been raised between January and October 2008, compared with Rs 45,000 crore (106 issues) in 2007, according to Prime Database.

Previous Ipos To Still Showing Profits - Nov 27, 2008

According to a study, initial public offers before 2005 still in green. However, IPOs made in the last four years are showing negative returns on an aggregate basis.The study, which calculated the returns of IPOs made in the last five years on the basis of mark-to-market (MTM) prices as of Tuesday, found that the 19 IPOs made in 2004, with a total investment of Rs 248 billion, have a MTM of Rs 339.7 billion, representing a return on investment of 36.92 per cent. Among those, 10 or 47 per cent are showing losses and only nine or 53 per cent are showing profits.

In 2005, there were 39 IPOs with a whole investment of Rs 90.48 billion. Their MTM is now Rs 70.12 billion, signifying a negative return of 22.52 per cent. Among those, 14 or 36 per cent are in the positive territory while 25 or 64 per cent are in the negative zone.In 2006, there were 79 IPOs with a total investment of Rs 176.84 billion. Their MTM is now Rs 114.96 billion, representing a negative return of 34.98 per cent. Among those, only nine or 11 per cent are in green, and as many as 70 or 89 per cent are in the red.

In 2007, there were 103 IPOs with a total investment of Rs.327.28 billion. Their MTM is now Rs 141.44 billion, representing a negative return of 56.79 per cent. Among those, only nine or 9 per cent are showing positive returns and as many as 94 or 91 per cent are in the red.

In 2008, there were 37 IPOs till date with a entire investment of Rs 161.84 billion. Their MTM is now Rs 56.12 billion, signifying a negative return of 65.32 per cent. Among those, only three or 8 per cent are showing profit and 34 or 92 per cent are showing negative returns.Within the five years a total of 277 IPOs were made by both private and public sector companies with a total investment of Rs 1.004 trillion. Their MTM is now Rs 722.4 billion, corresponding to a loss of 28.09 per cent.

Govt Shelves Rites Ipo Share Disinvestment - Nov 22, 2008

Government deferred disinvestment in rail infrastructure company RITES Ltd, due to the current market situation. At the same time government has decided to offload its 10 per cent holding in upstream firm Oil India Ltd. At present, government holds 98.13 per cent stake in OIL, which produces around four million tons of crude oil a year.

Earlier, on January 10 the Cabinet Committee on Economic Affairs (CCEA) had approved RITES initial public offering (IPO) through fresh issue of one crore equity shares and a simultaneous divestment of government's 10 per cent shareholding. The IPO has been deferred until further notice because of existing market conditions and economic turmoil.

Avesthagen Ltd IPO Looking At Biotech Company - Nov 22, 2008

Bangalore-based biotech company, Avesthagen Ltd, has shelved its plans to raise funds from the primary market due to the economic crises and downturn in the global market. According to the earlier schedule, the company was supposed to launch an IPO this year but now is looking to privet investors for rising money to tackle the crises.

According to Villoo Morawala Patell, chairperson & MD of Avesthagen, "We are looking at raising $30-50 million to ensure that our nine products, which are scheduled to be developed for the next two years, reach the market on time. We will be focusing on the immediate projects first and are in talks with people for that."

Indian Companies Allow IPO Shrinks Valuations - Nov 22, 2008

The meltdown in the domestic stock market has led the shrunk the country's primary market by more than 10 times during April-August 2008 as against the corresponding period in 2007.According to the data released in the November bulletin of the Reserve Bank of India, only 25 non-government public limited companies. managed tap the capital market in the present market condition to mobilise, a diminutive Rs 2,661 crore between them.

This is more than 10 times lower than amount India Inc earned (Rs 26,957 crore) during April to August 2007.Due to the fear of economic crises, many companies have allowed their IPO clearances to lapse to avoid compromising on their valuations. The chances of drawing a good premium on face value become lower when the secondary market gets battered.

Mandatory IPO Rating To Continue - Nov 14, 2008

Currently the mandatory grading of initial public offers (IPOs) in India by credit rating agencies will continue. SEBI's Primery Marekt Advisory Committee (PMAC), which had undertaken a review of the grading, has decided go with the process now.SEBI had asked PMAC to evaluate the grading of IPOs that was made mandatory in May, 2007. The industry is criticizing mandatory grading and wants the process to remain optional.

It has argued that the mandatory grading has increased the cost of raising funds along with delay in the IPO process which the market regulator was attempting to make faster and shorter. Grading expenses can be as high as one percent of the total issue size.

For getting rating from at least one agency, which is mandatory for an IPO, a company has to disclose all grades it obtains in the prospectus. Mandatory rating of debt offers has been in practice for sometime now.

Natural Gas Corp ONGC Is Looking At IPO Route - Nov 14, 2008

Oil and Natural Gas Corp (ONGC) is eyeing at an initial public offering (IPO) of its subsidiary that is building a Rs 13,600 crore petrochemical plant at Dahej. The IPO is being considered around the time of project completion in 2012.According to a senior company official, ONGC is considering selling up to 25% of the equity shares in ONGC Petro-additions Ltd (OPaL), the special purpose vehicle formed for setting up the petrochemical complex at Dahej SEZ.

The company is planning to give 19% equity stake in OPaL to state-run gas utility GAIL India, while another 25% interest may be offered to Petronet LNG and Bharat Petroleum or a strategic partner. ONGC holds 26% stake in OPaL, while Gujarat State Petroleum Corp (GSPC) holds 5% stake.

BSNL IPO Proposal With Unions Govt Goyal - Nov 14, 2008

Bharat Sanchar Nigam Ltd today informed that the proposal relating to its public offer through divesting 10 per cent of its stake is with the Centre and may get delayed due to the turmoil in capital market.According to BSNL Chairman and Managing Director Kuldeep Goyal, "The BSNL board had cleared the IPO plan of about 10 per cent and we have forwarded it to the government.

It is now with them to decide on the matter and under the present market conditions it was unlikely that government would take forward the issue now. The BSNL unions were also opposing the proposed IPO."

NHPC IPO Unlikely This Financial Year Offering - Nov 07, 2008

NHPC, state-run hydroelectric power producer has deferred its initial public offering till next year due to weak market conditions.The company had planned to raise nearly Rs 1,670 crore by selling 167 crore equity shares of Rs 10 face-value each.The company's board had approved the IPO along with government's disinvestment of 5 per cent, and filed the Draft Red Herring Prospectus with SEBI for the same.

This deferment of IPO is the second time for the company. Earlier, it has postponed its listing plans last year as independent directors were not on the Board. NHPC proposes to come out with a public issue of about 1,11.82 crore fresh shares and 55.91 crore existing shares of Rs 10 each at a premium. The premium is expected to fetch about Rs 5,500 crore to the company and around Rs 2,800 crore to the government.

The IPO proceeds would be utilized to finance the seven hydro-electric projects of the company, including 44-MW project at Chutak in Jammu and Kashmir along with 2,000 MW Subansiri Lower project in Arunachal Pradesh and 160-MW Teesta Low Dam-IV in West Bengal. NHPC has outlined expansion plans worth Rs 28,000 crore by 2012 and also plans to double its power generating capacity from the present 5,200 MW.

Indian IPO Ratings System Under SEBI Scanner - Nov 06, 2008

Last year in April, the rating system or grading of Indian initial public offers was made mandatory. Now IPO ratings system is under SEBI scanner. A ccommittee onsisting of 16 members headed by HDFC chairman Deepak Parekh in Mumbai on 4th November discussed on the efficacy of the IPO ratings system. More than 5% of the committee members feel that the present IPO grading by credit rating agencies do not take the price of the issue into account.

According to some members, a higher grade may be misleading. Those plumping for IPO ratings say that such rating is needed as it helps investors benchmark IPOs before investing. According to SEBI rules, IPO grading, is aimed to provide the investor with an informed and objective opinion. But at the same time, irrespective of the grade obtained by the issuer, investors needs to make an independent decision regarding the price before subscribing the shares offered through the public issue.

At present, registered rating agencies, such as Crisil, CARE, Icra and Fitch are doing the ratings. Grades between 1 to 5 are allotted according to the company fundamentals. Further, issuing companies pay Rs 5- 15 lakh to acquire rating from at least one credit rating agency.

Sebi Passed Disgorgement Orders In IPO Share Cases - Nov 05, 2008

Markets regulator Sebi has passed disgorgement orders of total Rs 1.05 crore in IPO share cases. The order is against against Himani N Patel and Dhaval A Mehta for allegedly cornering shares marked for retail investors in the Suzlon and IDFC public issues. Ms Himani N Patel cornered 10,160 shares intended for retail investors through falsified means, and later sold those shares for a neat profit. She subscribed to the Suzlon public issue and also financed other investors.

Sebi has directed Ms Patel to disgorge the unlawful gain of Rs 33,52,636, within 45 days along with a 10% interest from the date of listing of Suzlon shares. Sebi has also asked Dhaval Mehta to disgorge the unlawful gain of Rs 72 lakh along with interest at 10% from the date of listing of IDFC shares, within 45 days.

Religare Is Planning To Raise Rs 1,000 Cr Through Right Issue - Nov 1, 2008

Religare Enterprises, a financial services arm of Ranbaxy Group, is planning to rise more than Rs 1,000 through rights offering to its existing shareholders. The company's board is expected to meet on 30th October to consider rising of funds over Rs 1,000 crore at around current price level by further issue of equity shares on rights basis.

Public Offer For NTPC And NHPC Will Come Market - Oct 31, 2008

Government had informed that public offer for the sale of shares in the power firms NTPC and NHPC will wait till market will become stable. It will come when market conditions will be appropriate as at present situation is not in favour. According to the Power Secretary Anil Razdan, "NTPC's Follow-on Public Offer and NHPC's Initial Public Offer will come when the market conditions are conducive.