17 Companies with Sebi nod waiting for IPOs

Volatile markets, poor retail interest said to be the trigger.

As many as 17 companies which have got Securities and Exchange Board of India (Sebi) clearance for initial public offers (IPOs) are yet to announce the date for their public issues.

The firms are planning to raise Rs 10,000 crore from markets collectively.

Companies such as Reliance Infratel, Lodha Developers, IL& FS Transportation, Nitesh Estates, DQ Entertainment (International) and AMR Constructions are among those who obtained Sebi approval but have not declared the dates.

Companies are waiting for the right time to launch their issues as markets are volatile and retail participation in the recent IPOs has been dismal, companies and bankers say.

The BSE Sensex shed 7 per cent in 2010 after foreign institutional investors (FIIs) pulled out around Rs 9,435 crore from equity markets, after a 10 per cent rise between November and December 2009.

“We are working on the dates and getting ready for roadshows, as we have obtained the approvals. We want to time it correctly, as there is a volatility in markets. Though retail participation is weak, we are relying on institutional participation,’’ said a banker close to Nitesh Estates’ issue.

With the lukewarm response for its REC follow-on offer, the government is also not taking any chances. The state-run SJVNL, which is planning to hit the market before March, is likely to delay its IPO due to unsuitable market conditions.

Five out of nine IPOs such as Hathway Cable, Vascon Engineers and DB Realty, which were listed in February this year, are trading at 4 -35 per cent below their issue price.

The poor interest shown by retail investors in recent IPOs is also a big concern for companies planning to launch new issues. Though DB Realty got an overall subscription of 2.63 times, the retail participation was just 0.35 times. Similarly, Hathway got retail participation of 0.22 times, though the overall subscription was 1.34 times.

Now, the interest of companies for public issues are waning thanks to the the double whammy — declining markets and poor retail interest.

Only four new companies, Gyscoal Alloys, Mittal Corp, Inventuregrowth and Securities and Asian Business Exhibition and Conferences, applied for fund raising from equity markets in February.

As many as 61 companies had applied with Sebi to raise funds through IPOs between August 2009 and January 2010.

Some are waiting for signals from the Union Budget. “We will take a call after the Budget, as we would want to see what signal it sends out,’’ said a person close to the IPO of Lodha Developers.