Indian IPO industry had been stagnant until the issue of MCX IPO issue. The last successful issue was the one of Coal India Limited. Any issue after that had been marked with disappointment and skepticism. The calendar year 2011 had seen almost 28 IPO issue being withdrawn. This could have injected an amount not less than INR 28,000 Crore into the Primary Market.
The MCX IPO has been a huge success and poised to revive the Indian IPO industry. The issue which has been priced on an upper band of INR 1032 per share was over-subscribed 43 times. MCX which had previously failed thrice for complete subscription has not only changed the current dynamics of the market but also rejuvenated the primary market.
The IPO market previously had been so dampened that the companies preferred private placement and floated bonds to garner resources. The withdrawal of Goodwill Hospital IPO in late December had really made several companies (almost 47 companies have regulatory approval to float an IPO) to rethink whether they should go for IPO or not. The IPO market had been so severed that companies had to resort to issue of Bonds and alternative means of pooling money.
The resilience that the MCX has created has brought back the glory of IPO industry in India. The extent of investor’s involvement and commitment to the issue of MCX IPO has also resurfaced the fact that investors are looking for value proposition and fair valuation. With that in mind, let’s hope the IPO issue of Reid & Taylor too jump on the bandwagon soon.
This is a guest post by Mr. Mitesh Agarwal, BBA & MBA (Finance). Currently working as Financial Analyst with a leading firm in Mumbai.