Mumbai: Cash starved companies looking to raise fresh equity capital are finally expected to start the process for tapping the capital market in the coming weeks as investor sentiments have improved significantly in the stock market following the decisive electoral victory registered by the BJP led National Democratic Alliance (NDA).
According to merchant bankers handling public offers, at least a dozen companies are expected to file their offer documents with the capital market regulator, the Securities and Exchange Board of India (Sebi) in the coming days.
During the last two years, India had seen only a handful of companies hitting the primary markets as adverse secondary market conditions and subdued investors sentiments had forced many corporate to either postpone or defer their fund raising plans.
Sebi chief U.K.Sinha had last week told at an Assocham meet that in the last three years corporates who had desired to raise capital worth totally Rs 60,000 crore dropped their proposed IPOs and they included ones that received Sebi’s okay for their draft herring prospectuses. He had asked them to introspect why investors were cool towards IPOs and suggested they look into their pricing mechanisms. Mr Sinha pointed out that more than two-thirds of the issues that came to the market in 2012-13 and before were trading below their issue price. Even after adjusting for the general decline in the index there were still two-thirds of the stocks trading below their issue price.
While companies would start filing their offer documents in the coming days, investment bankers said that companies are expected to hit the market with their public offers only by September-October 2014 as they will have to update their latest audited quarterly results and ensure compliance with the new Companies Act.
“We could see at least a dozen companies filing their offer documents in the coming days. We are already into June and since it would take atleast 30-45 days for them to get the necessary approvals, they will have to update their April June quarterly results in their offer documents. Additionally, they will also have to comply with the new Companies Act, which had made it mandatory to have a remuneration committee and one women director on the company’s board among other things,” said B. Madhuprasad, V C of Keynote Corporate Services.
