IPOs unpopular with firms

Mumbai: Infrastructure construction company Rithwik recently opted for a private equity investor (Baring Asia) as against an initial public offer (IPO) for its fund requirements.
Though the Hyderabad-based company had filed its draft red herring prospectus (DHRP) with the Securities and Exchange Board of India (Sebi), it changed its decision to go ahead with the process because of volatile stock markets and the resultant impact on its valuations.
Rithwik is not an isolated case. There are a host of companies that have filed the prospectus with the capital market regulator, but have chosen against it. According to the norms, a company has to come out with its public issue within 90 days of its prospectus being approved by Sebi. If it fails to launch the IPO within the stipulated time, the approval lapses and the company has to restart the exercise.
According to Delhi-based Prime Database, a company that tracks the developments in the primary capital market, Acme Tele Power (Rs 1,200 crore), Pride Hotels (Rs 250 crore), Vascon Engineers (Rs 350 crore), TCG Lifesciences (Rs 175 crore), Surya Foods & Agro (Rs 136 crore), Neel Metal Products (Rs 125 crore) and Prince Foundations (Rs 300 crore) have received the Sebi approval, but have not tapped the market.
When markets are topsy-turvy, everyone, including the companies' management, merchant bankers, retail and institutional investors, chickens out.
"It's the question of valuation and whether the market is willing to take it. It also depends on how keen the company is in raising funds through the IPO, the opportune time and the urgency to list it," said a senior executive of a leading investment bank, who is currently doing road shows for companies to assess the appetite of financial institutions for IPOs, which has dried up substantially in recent times.
The support of well-known institutional investors, to a large extent, boosts the success rate of an IPO.
Bankers opine that not only retail investors, but even institutional investors are very cautious about investing in this market condition.
However, there are exceptions too. Companies with smaller issue sizes were brave enough to come out with their issues and did meet with decent subscription.
For instance, Gokul Refoils and Solvent, Anu's Laboratories and Aishwarya Telecom sailed through the IPO market quite comfortably.
Consider this: 2007 saw 100 companies raising Rs 34,179 crore from the primary market, but during the four months of 2008, 18 companies have raised about Rs 14,908 crore.
"IPOs can be typically floated only in a stable or a buoyant secondary market. First the market crash in January this year and then huge volatility thereafter have made most issuers wary.
"The issuers expect higher value, but the market is in no mood to accept it, given the present depression. As many as 24 companies have currently got the Sebi approval and, in good times, they would have immediately rushed to the market. Given some stability in the market, the good news is that at least some of these, including UTI Asset Management, are now gearing up with their plans to hit the market," said Prime Database CMD Prithvi Haldea.

Reliance Infratel gets SEBI nod for IPO: Sources

CNBC-TV18 learnt from sources that SEBI has given clearance for the Reliance InfraTel IPO (subsidiary of Reliance Communications and looks after the tower business). The company is planning to dilute 10% equity and is seeking a valuation of about Rs 5,000 to Rs 6,000 crore for that 10% equity. This is a significantly higher than what it fetched when it divested 5% stake (Rel Comm holds 95% stake) at Rs 1400 crore to PE investors in July 2006 so that would value Reliance InfraTel about Rs 28,000 crore. Now they are valuing the company at around Rs 50,000 crore to Rs 60,000 crore, the difference is because much has changed and there is now certainty to the GSM rollout.
So for every tower that the company has, there is an added tenant which is Reliance GSM, and also the company has expanded its tower base significantly. Back then in July 2006 it had about 13,000 towers, now it has about 35,000 towers and is hoping to add another 20,000 towers by the end of this Fiscal, and also it is looking at active infrastructure sharing agreements with other players. It is very close to signing the infrastructure sharing pacts with Shyam Telecom and BSNL so because of these triggers the company is seeking a higher valuation. There is no word yet on when this IPO will hit the markets, we are given to understand that it will be later this year but the exact timing is yet to be worked out.

Bafna Pharmaceuticals IPO opens on May 27

Bafna Pharmaceuticals' public issue of 64,00,000 equity shares of Rs 10 each at a price of Rs 40 per equity share (including share premium of Rs 30 per equity share) for cash aggregating Rs 25.60 crores will open for subscription on May 27, 2008 and will close on May 30, 2008.
The issue will constitute 40.05% of the post issue paid-up capital of the company. The issue price is 4 times of the face value. The shares are proposed to be listed on the BSE.
Cameo Corporate Services is the Registrar to the Issue.
Ashika Capital and Keynote Corporate Services are the Lead Managers to the Issue.

New IPO application forms to avoid manual intervention

SEBI’s Primary Market Advisory Committee (PMAC) has given an in-principle nod for initiating steps to ensure “no manual intervention” in the primary market issuance process.
The Minister of State for Finance, Mr Pawan Kumar Bansal, said in a written reply in the Rajya Sabha today that the PMAC has endorsed the suggestions of the Group on Review of Issue Process (GRIP) on this matter. GRIP had recommended modified application forms that can be submitted physically as well as electronically.
For transparency
“These measures will enable faster and transparent processing of application forms leading to a reduction in the time gap between closure of an IPO and its listing,” Mr Bansal said.
Indications are that the proposed measures would be placed for approval before the SEBI Board, as part of reform process on the primary market. SEBI had advised the PMAC to review the entire issue process with an objective to reduce the time gap between closure of an IPO and its listing, reports The Hindu Business Line.

Anu's Labs files for IPO

Hyderabad-based Anu's Laboratories has filed draft red herring prospectus with Sebi to raise around Rs 800 million from the capital markets.
Anu's Labs is the market leader in producing Dichloro-5-Fluoro Acetophenone, or DCFA, a key intermediate for ciprofloxacin. The company has over 60% market share in the country.
The company plans to deploy the proceeds raised from the initial public offering to set up an intermediary plant and contract research facility at Pharma City in Visakhapatnam, reports The Hindu Business Line.

Gokul Refoils IPO opens on May 8, price band Rs 175-195

Gokul Refoils and Solvent, a Gujarat based company, engaged in the business of solvent extraction, refining of Edible oils and Vanaspati manufacturing, has received ROC clearance and has fixed a price band of Rs 175 to Rs 195 for its forthcoming initial public offer (IPO) of 71,58,392 equity shares of Rs 10 each for cash.
The net issue to the public comprises of 70,83,392 equity shares and 75,000 equity shares have been reserved for the employees. The issue will constitute 27.14% of the fully diluted post issue paid up equity share capital of the company. The face value of equity shares of is Rs 10, floor price is 17.5 times of the face value and the cap price is 19.5 times of the face value.

The company intends to raise Rs.139.59 crores at the cap price of the price band. The 100% Book Build Issue Opens on Thursday May 8, 2008 and Closes on Tuesday May13, 2008.
About Gokul Refoils and Solvent
Gokul Refoil is primarily engaged in the business of Solvent Extraction, refining of Edible oils and Vanaspati manufacturing. The company’s manufacturing facilities at Sidhpur, Gandhidham & Surat, have the ability to provide comprehensive range of oil products. Moreover, Gokul is one of the few players in the vegetable oil industry in India that are able to produce a broad variety of oil & derivative products. The manufacturing facilities are versatile in nature, can process various types of oils including palmolein, soyabean, cotton, sunflower, groundnut and mustard. The existing setup is such that the company can switch over from processing of one type of oil to another type of oil with no down time.
Financials:
Gokul Refoils consolidated total income for the financial years ended March 31, 2007 was Rs. 1599.86 crores and Rs.1347.82 crores for the period ended Nov, 2007. Profit after tax for the FY07 was Rs. 25.73 crores, and Rs.41.83 crores for the period ended Nov 30, 2007. Company’s sales have grown at a CAGR of 39.30% over the last 5 financial years and its PAT has increased at a CAGR of 41.16% over the last 5 financial years and EPS reported a growth of 24 % in last 3 years.
Present Business Activity & its Products:-
Today the group’s interest includes Refining of Edible oil, Castor oil & its derivatives, Vananspati, Solvent Extraction & Power Generation and Commodity trading in the domestic as well as international markets At present Gokul Refoils and Solvent Limited has 680 TPD of seed processing, 600 TPD of Solvent Extraction, 1200 TPD of refining & 200 TPD of Vanaspati manufacturing. The units are situated at: Sidhpur (Sidhpur unit, North Gujarat), Anjar (Gandhidham unit, Kutch), Navi Pardi (Surat unit, South Gujarat) & Kutch (Wind mills).

Adani Power to raise USD 1 bn via IPO: Sources

Adani Power will file its Draft Red Herring Prospectus, or DRHP, in next 10 days, reports CNBC-TV18, quoting sources. The company is going to raise close to USD 1 billion via this IPO.
Adnani Power a 86% subsidiary of Adani Enterprise has a power generation project pipeline of 9,900 MW.
During October 2007, Adnani Power had offered 9% stake to 3i Capital for Rs 900 crore. Adani Enterprises stake is valued at over Rs 15,000 crore.
The company plans to dilute close to 15% stake for Rs 4,000-5,000 crore. Thus, the company is valuing between Rs 20,000-25,000 crore.

Reliance Power puts IPO money in MFs

Reliance Power Ltd, which raised Rs 11,562 crore in its IPO in January last, has temporarily parked almost the entire money in mutual funds. The 2007-08 financial results declared by the company on Monday show that Rs 11,412.81 crore is invested in mutual funds. The company has not disclosed either the funds or the schemes where the money has been invested.
The IPO offer document says that the company “intends to invest the funds from the issue in interest bearing liquid instruments including deposits with banks and investments in mutual funds. These investments may include investments in mutual funds managed or financial products sold by one of our affiliates, RCL (Reliance Capital)”
The company has spent only Rs 25.83 crore as of March 31, 2008 in construction and development of its various projects.
The temporary parking of the IPO money in mutual funds has helped the company report a net profit of Rs 94.6 crore for 2007-08. Total income for year stands at Rs 132.8 crore, of which dividend income is Rs 112.7 crore.
The company has also informed that from March 31, Coastal Andhra Power Ltd, Reliance Coal Resources Pvt Ltd, Sasan Power Infrastructure Pvt Ltd, Sasan Power Infraventures Pvt Ltd, Maharashtra Energy Generation Infrastructure Ltd and Coastal Andhra Power Infrastructure Ltd have been incorporated as wholly owned subsidiaries.
On the BSE, the scrip was traded at Rs 403.25, an increase of 0.27 per cent over the previous closing of Rs 402.15, reports The Hindu Business Line.

Hi friends

Hi friends
this my first post in this blog, this dedicated for Indian IPOs
wait and see for more