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IPO market hotting up

After five months of lull, the number of companies filing applications with the stock market regulator for an initial public offer (IPO) is beginning to look up this month, reports Sandeep Singh.

business Updated: Aug 19, 2008 21:11 IST
Sandeep Singh

Confidence may be returning to the market for initial share offerings by companies. After five months of lull, the number of companies filing applications with the stock market regulator for an initial public offer (IPO) is beginning to look up this month.

Six companies, including state-owned power generation company NHPC Ltd, have already filed their respective offer documents with the Securities and Exchange Board of India.

On Tuesday, Orissa Manganese and Minerals, a subsidiary of Adhunik Metaliks Ltd, announced its plans to bring an IPO later this year, and Oil India Ltd, reports said, would hit the market in November.

The latter had filed its offer document in December 2007, but decided to defer the IPO because of a volatile market that followed.

The August filings mark a sharp improvement from previous months. In July, there were only three and in all of past five months, there were 22 compared to 46 in the same period last year.

“There is a feeling of revival in the market,” said Devdatta Buche, a top executive in the investment banking division of Religare Capital Markets.

Still, many big companies such as Reliance Infratel, Pipavav Shipyard and Emaar-MGF, which had earlier put off their IPO plans because of the state of the market, remain shy.

“Primary market follows the secondary market,” said S Ramesh, chief operating officer, Kotak Investment Banking. “It is better than what we have seen till a month ago because of the expected policy reforms and softening oil prices.”

Easing crude prices, down more than 20 per cent in the past month, have helped the stock market recover. Sentiments have also been buoyed by the government’s plan to resume its disinvestments programme, which was earlier held up because of opposition from leftist parties.