Published on Tue, Dec 20, 2011 at 14:49 | Source : Moneycontrol.com
Updated at Thu, Dec 22, 2011 at 14:27
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IPO market: A big wealth destroyer in 2011
In a analysis report, Jagannadham Thunuguntla, Strategist & Head of Research of SMC Global Securities Limited said, the IPO market has been a big 'wealth destroyer' in 2011.
In a analysis report, Jagannadham Thunuguntla, Strategist & Head of Research of SMC Global Securities Limited said, the IPO market has been a big 'wealth destroyer' in 2011.
According to him, of the 39 public issues that came during the calendar year 2011, only 9 public issues are trading above their issue prices. And, 30 public issues are trading below their issue prices."
He said, "Overall, the total amount raised during the year through public issues is to the tune of about Rs 14,112 crores. As markets have severly corrected, on aggregate basis, the current mark-to-market value of these public issues came down to Rs 10,014 crore. Hence, the public issue market of the calendar year 2011 has seen wealth erosion of Rs 4,098 crore, representing a mark-to-market loss of 29%."
"Such wealth erosion have made investors shy away from the public issue market, leading to shelving of several IPOs including the government PSU disinvestment plans," he added.
According to Jagannadham, this huge wealth erosion may be attributable to tendencies of high pricing in public issues; and lower quality of public issues.
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