Primary markets turmoil: Already 4 IPOs called off in 2012!

Already 4 IPOs called off in 2012, says Jagannadham Thunuguntla, Strategist & Head of Research, SMC Global Securities Limited.

1. The calendar year 2012 has started on very positive tone for the capital markets, with elevated mood of the sentiment and significant FII inflows.

2. Despite such positive momentum in secondary market in January 2012, that momentum couldn't spillover on to the IPO markets. About 4 IPOs were already called off during the calendar year 2012. All these 4 IPOs despite having valid SEBI approval in hand for their IPOs. Even then, they couldn't open their IPOs within the validity period of one year from the date of SEBI approval.

3. The aggregate amount supposed to be raised by these 4 IPOs was to the tune of about Rs 701 Crores. The names of the IPOs that being called off are Micromax Mobiles (approx IPO amount of Rs 426 Crores), Pride Hotels (approx IPO amount of Rs 125 Crores), Betul Oil (approx IPO amount of Rs 100 Crores) and Tara Jewels (approx IPO amount of Rs 50 Crores)

4. This is in continuation of the IPO market challenges in the calendar year 2011, when about 29 IPOs were called off. The aggregate amount supposed to be raised by those 29 IPOs was to the tune of Rs 32,398 Crores.

5. Further, there are atleast 10 other companies who have valid SEBI approval in hand and are left with just 2 months in their validity period of one year from the date of SEBI approval. Such companies include Joyalukkas India, Lokmat Media, Aravali Infrapower, VRL Logistics, Embassy Property Developers, etc. The total amount that is expected to be raised by these 10 IPOs is to the tune of about Rs 4,210 Crores.

6. As the government's disinvestment program is also in "wait-and-watch" mood, the IPO market is not getting the kind of momentum that is expected to happen.

7. If this slowdown in IPO market continues, then there shall be significant impact on the fund raising abilities of Indian corporates. This will also have impact on the ability of exits for private equity funds.

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To see full list of the companies click on the attachment