3 firms may let share sale deadlines lapse this month

Several firms allowing their IPO approvals to lapse reflects the difficult conditions in the primary markets.

Mumbai: At least three companies will see their respective initial public offering (IPO) approvals from the Securities and Exchange Board of India (Sebi) expire this month, almost 12 months after receiving the regulator’s nod.

The companies—Anil Ambani-led Reliance General Insurance Co. Ltd, Baring Private Equity Asia-owned CMS Infosystems Ltd and shipping company Seven Islands Shipping—had filed their draft red herring prospectus in September-October 2017. Collectively, the firms planned to raise ₹3,500-4,000 crore from the markets.

According to Sebi’s website, while Seven Islands Shipping’s IPO approval lapses on 10 November, those of Reliance General Insurance and CMS Info Systems expire on 29 and 30 November, respectively.

Sebi’s approval for an IPO is valid for one year. Last month, Gandhar Oil Refinery (India) Ltd‘s approval lapsed after it failed to launch its IPO within the 12-month period.

Several companies allowing their IPO approvals to lapse reflects the difficult conditions in India’s primary markets, which have also seen several high-profile deals get postponed due to lack of investor enthusiasm. Secondary market volatility and other macroeconomic headwinds, such as crude price and rupee depreciation, have also impacted investor interest in public offers.

“Markets have been very volatile this year and valuations, especially, in the mid- and small-cap segments have corrected significantly compared to last year. As a result, pricing deals is a challenge from all perspectives,” an investment banker, who advises clients on IPOs, said on condition of anonymity.

Some companies might file their offer documents again and take fresh approvals with the hope that markets will improve early next year or after the general elections next year, he added.

Recently, Prince Pipes and Fittings Ltd re-filed its draft prospectus with Sebi. The company had earlier filed its draft papers in September 2017.

“The management is evaluating all possible options and is yet to take a final decision on re-filing, given the volatility in the market and uncertainties surrounding the general elections,” said a Gandhar Oil Refinery spokesperson.

Emails sent to Reliance General Insurance, CMS Info Systems and Seven Islands Shipping, enquiring about their IPO plans, remain unanswered till press time.

In 2017, 36 companies had raised Rs 67,147 crore through the IPO route, while 24 companies have raised Rs30,959 crore so far this year, data from primary market tracker Prime Database show.

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