New Delhi, Mar 20 (UNI) Keeping in view the crash and the subsequent volatility in the stock market, IPOs worth Rs 35,000 crore may be under deferral mode, an industry body study said.
According to a joint study of Assocham and Prime Database, as many as 20 companies, planning to raise Rs 3,718 crore in total, have already deferred their IPOs while another 44 IPOs, planning to raise Rs 31,000 crore and are presently awaiting SEBI approval, may also be hit until the market recovers.
''Some of these 64 pending IPOs might still go ahead with their IPO plans, though at reduced valuations, even in the present market conditions,'' Assocham Capital Markets Committee Co-Chairman Prithvi Haldea said in a statement.
These 20 companies include Acme Tele Power, Pride Hotels, Prince Foundations, Vascon Engineers and Xenitis Infotech, while Ashoka Buildcon, DB Corporation, Future Ventures, Jaiprakash Power Ventures, JSW Energy, Mahindra Holidays, NHPC, Oil India and Reliance Infratel are part of the companies planning their IPOs.
At the beginning of the year, the same joint study had estimated that subject to stable secondary market conditions, the 2008 will have seen mobilisation of nearly Rs 60,000 crore through IPOs.
The first three months of the year have seen 17 IPOs aggregating Rs 14,900 crore, and this amount would have been much larger if the the secondary market would not have crashed in the later part of January.
However, Assocham President Venugopal N Dhoot said he had already submitted a detailed representation to Ministries of Finance and Corporate Affairs including the SEBI, demanding the government not to act in haste to increase public participation in listed companies to the extent of 25 per cent from the existing 10 per cent.
''Considering the economic growth of the country and the market capitalisation of listed securities, the government should not uniformly initiate increase in public holdings in listed companies to the extent of 25 per cent in one go,'' he pointed out.
The industry body has urged the authorities concerned not to push this proposal as proposed within a period of three months but take at least five years to accomplish the same.
It has cited a recent study of the top 30 companies by market capitalisation which indicates that only three of 30 companies have a public shareholding below 25 per cent if the holding of Financial Institutions (FIs), banks and Foreign Institutional Investors (FIIs) is considered as public shareholdings and only eight of these 30 companies have a public shareholding of 25 per cent if the holding of FIs, banks and FIIs is not considered as public shareholding.
Same regulations should be applied for public holdings in case of both government and private sector companies, the industry body argued.
Besides, it also opined that the power of the stock exchanges to relax any of conditions for listing with the prior approval of SEBI in respect of a government company needs to be withdrawn. Similarly, the powers of SEBI to relax listing requirement of public companies should also be withdrawn.
The industry body suggests that the present standards for initial listing as prescribed in Rule 19 (2)(b) of the Securities Contracts (Regulation) Rules, 1957 should continue. These provide that at least 10 per cent of each class or kind of securities issued by a company was offered to public for subscription.
The conditions include a minimum 20 lakh securities (excluding reservations, firm allotment and promoter's contributions) to be offered to the public, the size of offer to the public was minimum Rs 100 crore and the issue is sold only through book building method with allocation of 60 per cent of the issue size to the qualified institutional buyers.
UNI SG AK HT1825