After keeping the flag flying almost single-handedly for over a month, India has also succumbed to the global turbulence in the IPO market, with two companies withdrawing their offers in as many days and another cutting down the price and extending its bidding period.
Realty developer Emaar MGF on Friday withdrew its IPO, which was being billed as the world's biggest real estate issue this year, just a day after healthcare provider Wockhardt Hospital shelving its public offer.
In addition, weak investor response also forced SVEC Construction, which is the only public offer currently active in Indian market, to cut down its IPO price as well as extend the bidding period for three days till February 13 with the hope of garnering more bids. The issue could not get subscription for even a quarter of total shares on offer till today, which was scheduled to be the last day until the extension.
Though only two firms have pulled out their IPOs in India so far, investment bankers said that these are set to affect a number of public offers currently in the pipeline, as it is already happening in the global markets.
In the US, at least 10 companies have withdrawn their IPOs so far in 2008, while Europe has also seen a number of withdrawals, including by renowned fashion brand Tommy Hilfiger that had planned a two billion dollar flotation in Amsterdam on NYSE Euronext.
Till recently, India was being considered as the only saving grace in the ailing IPO market, where the companies have raised a total of 3.3 billion dollars since the beginning of this year - the highest for any country, and nearly 50 per cent of the total IPO proceeds worldwide in 2008.
A bulk of total proceeds in India has been raised by Reliance Power IPO from the Anil Ambani Group, which raised last month $3 billion in the country's biggest ever IPO. An investment banker said it would need a business house like Anil Ambani's again to restore the sentiments, which could come in the form of Reliance Infratel, which has filed its draft prospectus, as well as Reliance Entertainment, which is also reportedly planning a public offer.
Reliance Power is the last major IPO, with a size of at least a billion dollar that saw success not only in India, but across the world, with huge over-subscription. Prior to cancelling its IPO on Friday, Emaar MGF had tried to gain some traction by revising its price band and extending the bidding period, and same was done by Wockhardt.
However, even investors who had earlier bid for Emaar MGF later withdrew their bids and total subscription dropped to 43 per cent by 3 PM, from close to 84 per cent till mid-day.
Wockhardt IPO was subscribed just about 20 per cent before it decided to withdraw the offer on Thursday.
Globally, IPOs worth more than seven billion dollars have been withdrawn or postponed so far this year. These include even flotations by some government companies. Late last month, Danish government postponed a 3.5 billion dollar flotation of Dong Energy due to weak market conditions.
However, the Indian government on Friday put up a brave face, saying it was still confident about the success of upcoming IPO of state-run power sector lender Rural Electrification Corporation, which is seeking to raise up to Rs 1,640 crore through an IPO, scheduled to start on February 19.
Chinese government also appears to be confident about IPOs of several state-owned companies in Shanghai and Hong Kong, with regulatory approvals being received for a USD 4 billion listing of China Railway Construction.
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