Fund mobilisation through initial public offerings (IPOs) touched a six-year low in 2008-09 due to the weakness in the secondary market and the global financial turmoil. India Inc mobilised only Rs 2,034 crore, down by over 96 per cent from the Rs 52,219 crore raised in 2007-08.

Globally too, fund-raising through IPOs was restricted to $49.46 billion, down 83 per cent from the $292.21 billion raised in 2007-08. Of this, emerging markets raised $23.69 billion in FY09 as against $107.83 billion a year earlier. In the us, the figure was dismal for 2008-09 at $6.47 billion when compared with $68.30 billion raised via IPOs in 2007-08.

Only two of the 21 IPOs (less than 10 per cent) were oversubscribed by more than 10 times. In fact, 14 issues barely managed to get full subscription. It was in 2008-09 when grading of IPOs emerged as a mandatory requirement. As a result, all the 21 issues that entered the market during the year had been graded.

Significantly, the lowest-graded IPOs generated the best oversubscription figures. While, conversely, the highest-graded IPOs offered poor or negative returns post-listing. In fact, two highly-graded IPOs – Emaar MGF and Wockhardt Hospitals – failed to evoke the expected response and had to be withdrawn.

“A falling market, combined with volatility and uncertainly, is an anathema to the primary market. An IPO is a once-in-a-lifetime event and no company would dare push its luck and face the prospect of a disaster. So companies are unwilling to compromise significantly on their valuations, which are badly hit," said Prime Database CMD Prithvi Haldea.Others didn't even enter the market, choosing instead to drop their IPO plans.

These included Reliance Infratel (Rs 6,000 crore), Jaiprakash Power (Rs 4,000 crore), UTI AMC (Rs 2,000 crore), Acme Tele Power (Rs 1,200 crore), DB Corp and Mahindra Holidays & Resorts (Rs 1,000 crore each) and MCX (Rs 600 crore).

If even one of these IPOs had hit the market, the figures for FY09 could have been different, provided it had been fully subscribed.

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