“The lack of appetite is primarily on account of project execution risk and high leverage,” says Jagannadham Thunuguntla, equity head of Delhi-based investment bank SMCCapitals. Real estate companies that are awaiting Sebi clearance are Sahara Prime, Lodha Developers, DB Realty, Kumar Builders, Nitesh Estates, Prestige Estates, BPTP, Ambience, Neptune Developers etc.

1. IPOs seen making way for mega PSU offers
8 Jan 2010, 0204 hrs IST, Deeptha Rajkumar, ET Bureau
MUMBAI: Despite a huge pipeline of issuances, the current calendar year is likely to see a
slower rollout of initial public offerings (IPOs). At last count, as many as 41 prospectus are
awaiting Sebi clearance, with some more waiting to be filed.
Even if the necessary regulatory approvals are obtained before the end of this month, most
companies are unlikely to hit the market before the completion of mega PSU issuances lined up
in February. Last month, five issues have been cleared, and none so far this month.
“There is a clogging up at the Sebi end. Prospectus filed as late as September 2009 are yet to be
cleared,” said an investment banker with a foreign bank. “If the September deals had been
cleared in December 2009, we could have seen a few hit the market by end-January. With
February and March being crowded months, one may not see any offerings come to the market
in these months,” he said.
If one were to do a random check, of the six documents filed on September 25, ‘09 (including
one rights), only one IPO has received clearance. Of the 10 documents filed on September 29,
‘09 (including one rights), only the rights issue was cleared. Of the 13 documents filed on
September 30 (including four rights), only one issue was cleared. Significantly, the REC
prospectus, which was filed on December 1, 2009, had received observations by December 31.
February 2010 will see three big PSU follow-on public offerings (FPOs) hit the market. These
include those from NTPC, NMDC and REC. The Union Budget will also be presented in
February. Typically, April is the month where companies report their fourth quarter earnings and
it’s also the time for advance tax payment. As such most bankers are looking at a post-April
listing.
Interestingly, this will be the first time that the auction methodology will be introduced in FPOs.
Sebi had in November 2009 said the auction-based book-building method for FPOs will allow
QIBs or institutional investors to bid for shares at any level above a floor price and shares will be
allotted at different prices.
Under the new method, bidders will be free to bid at any price above the floor price. At present,
allotments are made at the floor price. Retail investors, however, will be allotted shares at the
floor price.
“Going slow doesn’t mean that we will see fewer IPOs come to the market in 2010. In fact, the
level of activity will be higher than last year,” says Munesh Khanna, CEO and MD-Investment
Banking, Centrum.
Of the 41 prospectus filed with Sebi, 12 are from realty firms, while four more are borderline

2. real estate/infrastructure companies. Some bankers believe that the market is not ready for so
many real estate IPOs.
“The lack of appetite is primarily on account of project execution risk and high leverage,” says
Jagannadham Thunuguntla, equity head of Delhi-based investment bank SMCCapitals.
Real estate companies that are awaiting Sebi clearance are Sahara Prime, Lodha Developers, DB
Realty, Kumar Builders, Nitesh Estates, Prestige Estates, BPTP, Ambience, Neptune Developers
etc.