Emaar MGF, the collaboration of Dubai based Emaar Properties and India based MGF Development Limited has announced on the Friday to abandon the gigantic IPO just before a day of closing day. It was the second IPO withdrawal in just 24 hours that happened first time in India stock market.
The Health care service provider Wockhardt Hospitals had earlier withdrawn its IPO on Thursday due to investor’s apathy. However, Emaar has blamed the volatile market condition behind its decision to scrap the IPO, as ‘Rather than going ahead with an IPO at this stage with an uncertain post-listing scenario, we do not want investors to lose their money in the short term because of the prevailing market conditions’ as Emaar argued in a released statement.
Emaar, one of the largest real state developments and Construction Company of Dubai along with MGF, Indian Real Estate Development Company had jointly introduced the fourth largest IPO in the Indian bourses on February 01 with an equity face value of Rs.10 each in the upper price band of Rs.610-690, but the venture had to revised the price band two times to grasp the mass, even though it could not succeed.
Emaar MGF then reduced the price band from upper price band to lower price band of Rs.540-630 then waived off it again to Rs.530-630 for each equity share after getting negative response from investors. As per NSE news it could manage to subscribe only 0.39 times that decided to withdraw it.
Emaar MGF has targeted to collect USD1.46billion from Indian Stock market. Though they have withdrawn IPO this year, but they have assured the investors to come again when the market would bullish. However, they have not set the time limit yet indicated to be not more than two years.
According to market sources, the IPO portion of QIBs and HNIs had got the positive response but it could not get same as from retailers. In QIB category it had subscribed 0.99 times (but later dropped to 0.29 times) while in HNI category it was subscribed 0.98 times. In the retailers category it was only 0.46 times till Thursday that forced the company to withdraw the IPO.
On the other hand, some sources reveals that the Dubai stock market is behind the withdrawing decision as in Dubai Stock Exchange, Emaar’s IPO had get cold response and was subscribed on just 12.15 dirham (Rs 130) against the Emaar MGF price band of Rs 530-630.
Though Emaar has not issued any official comment over it.
“This decision to withdraw would help us in the long run,” clarifying the decision, said Shravan Gupta, the Executive Vice-Chairman and Managing Director of Emaar MGF Land.
Bankers and investors are relating these withdrawing IPO decision with the ‘decaying existence of IPO’ as some believes that ‘now people have become choosy, they invest on some selective brands not in all, Reliance’s and Future’s recent IPO are the biggest example of this, cited the experts.
Reliance power IPO was subscribed 72 times while Future Capital IPO had got 27 times subscription.
Despite of this decision, some government and private sector companies are still willing to introduce their IPO in which the IPO of Rural Electrification Corporation (REC), GSS America Infotech Ltd, V Guard Industries Ltd, Globus Spirits Ltd are going to hit the market in the coming weeks.
Enam Securities Pvt Ltd and DSP Merrill Lynch Ltd was the premier sponsor of Emaar MGF IPO while Citigroup Global Markets India, Kotak Mahindra Capital, HSBC Securities and Capital Markets (India), JPMorgan India, Goldman Sachs (India) Securities and ICICI Securities were also promoting it.
Earlier Anil Ambani owned Reliance Power Ltd had launched India’s largest ever IPO in January while DLF’s, India’s biggest real estate developing company and Mukesh Ambai owned Reliance Petroleum limited’s IPO were on the third position in IPO history.
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