IPOs raise just $1.77 B in H1: Study

By agencies   |   Tuesday, 18 October 2005, 07:00 Hrs
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NEW DELHI: Despite the continuing boom in the secondary market and the good feeling about IPOs, the first half of fiscal 2005-06, turned out to be damp squib for the primary market, an analysis by PRIME shows.

In terms of the amount raised, capital mobilization in the first six months of the year was just $1.77 billion, which is 16 percent lower than the corresponding period of the preceding year, which had seen mobilization worth $2.1 billion.

"The amount raised through public issues did not come anywhere close to market expectations at the beginning of the year. This is despite the huge success of public issues of the past year," Prithvi Haldea of PRIME said.

"The biggest disappointment for the primary market has been the lack of divestments by the Government. Not a single divestment took place in the current fiscal; in fact, the last divestment was in October 2004 of NTPC. The pipeline of divestment and PSU offerings continues to become larger by the day yet nothing of it seems to be materializing," Haldea said.

In terms of numbers, however, there was a huge improvement.

The first half witnessed 35 public issues as per PRIME, which represented a 250 percent increase from the 10 issues in the corresponding period of the preceding year.

According to PRIME, more than 250 IPOs are in active pipeline and this includes only such companies that have announced their plans in the recent past. These collectively intend to raise a worth $22 billion.

"If even a few of these IPOs make it to the market in the near future, it would not only help channelize household savings into the economy, but also give the long-awaited breadth to our secondary market," Haldea said.

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