REC IPO to open tomorrow despite market turmoil

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New Delhi, Feb 18 (UNI) Ending all the speculations, state-run Rural Electrification Corporation's (RECs) IPO will hit the capital market tomorrow despite market turbulence.

The compay, which has been accorded as Mini Ratna Grade-I status, will issue 15,61,20,000 shares, to be decided through a 100 per cent book building process.

The price band of shares of face value Rs 10 each has been fixed at Rs 90-105 per share. The issue closes February 22.

There were reports that the company may defer the IPO as many companies had suffered due to the turbulent market.

Recently, the highly anticipated debut of Reliance Power disappointed the investors.

The shares slumped to Rs 372.50, 17.2 per cent down from the Rs 450 offering price. At its worst, the stock was down by 21 per cent.

Real estate developer Emaar MGF and health care services provider Wockhardt has also withdrawn their respective issues following poor response.

The plummeting Indian bourses also claimed Hyderabad-based construction company SVEC Constructions Ltd as it withdrew its IPO citing poor response on the backdrop of weak global cues.

For many analyst it has been the high valuation of the IPO with promoters expecting whirlwind response for such issue.

However, companies maintain that weak global cues and the volatility of the Indian markets has meant poor response.

This does seem to be ostensible lie on part of the companies as most valuations seem far in excess of its worth and analyst now feel the promoters and merchant bankers will have to undertake serious retrospectio on the issue.

However, Power Secretary Anil Razdan had said, the meltdown in the market would not have any bearing on the public offer of REC, which is expected to list on the bourses by third week of March.

Mr Razdan had maintained that the market needs companies like REC with a proven track record.

''At a troubled time like this, a strong and trusted player which has been in business since 1960s is needed,'' he had said.

Similar thoughts have been echoed by analyst who feel that given REC's low price band and its business prospects coupled with a strong order book, the issue, if it does go ahead, can do well.

Also the prospect of a public sector dis-investment can be an ideal way to test the IPO waters and help in getting a semblance of IPO market and provide a cue for forhcoming issues.

REC would offload 18.81 per cent equity through the issue. The company is third power PSU to bring out an IPO after PFC and PGCIL got listed last year.

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