The much awaited refund of over Rs 100,000 crore by Reliance Power is expected to come to the rescue to the four public issues that are struggling to raise over Rs 8,000 crore by next Wednesday February 6.
Reliance Power, which had received application amount of around
Rs 1,13,000 crore, has dispatch order for the refund for the surplus to the investors. In addition, Fortune Capital public issues that got an application amount of around Rs 16,000 crore against the offer size of Rs 490 crore has also started the refunds, which will be completed by Monday.
The Rs 6300 crore public issue of Emaar MGF that opened on Friday has subscribed 16 per cent on the first day. Investment bankers, who are handling the issue, feel that the issue will get good responses from institutional investors particularly from West Asia, which is closed on Friday and Saturday.
The refund of Reliance Power IPO may help the retail portion also, said bankers. The foreign partner — Dubai-based Emaar — has already committed to put in Rs 920 crore at cutoff price to retain its holding at 37 per cent in the company.
The worst hit from the recent carnage in the market is Rs 700 crore public issue of Wockhardt Hospital, which opened on Thursday and would close on February 5. In the first two days, the issue has virtually response of less than one per cent.
There are indications that the issue is expected to face rough weather given the lukewarm responses from all category of investors, according to the bankers who are handling the issue.
However, after the market mayhem that started on January 21, two issues – On Mobile and Sriram ERC— that enter the market in the last week of January have managed to get fully subscribed. While On Mobile’s Rs 450 crore issue oversubscribed around 10 times, Sriram ERC, which closed on Friday, got subscribed nearly four times.
In a market like this, investors become conservative and suddenly we find discussion of quality issue, said Arun Kejriwal of Kejriwal Research Securities. “In such a market we may experience some of the over ambitious companies falling flats while the good companies scathing through and eventually merchant bankers advising he company to be conservative,” he added.
When volatility is such that the market lose 20 per cent over a period of one week, the promoters and bankers will find it difficult to aggressively price the issues, said a banker.