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Wednesday, June 21, 2006

Vigneshwara Exports withdrawn IPO

The equity market's meltdown is beginning to have an impact on the primary market with two companies, Bluplast Industries and Vigneshwara Exports, being forced to withdraw their initial public offerings, IPO, due to poor response, reports The Hindu Business Line.

Despite bringing down the price band from Rs 121-140 range to Rs 110-124 band, Vigneshwara Exports could get only 89% subscription. When contacted, an official of Vigneshwara Exports said the company has decided to withdraw the issue, as most applicants submitted their bids at the bottom price of Rs 110.

"We feel the company deserved a better valuation than Rs 110," he said. The company had received another 20% through physical format, but due to technical reasons this could not be uploaded, he added. The company was planning to mobilise about Rs 55-60 crore through this IPO. Karvy Investor Services was the lead book runner for the IPO.

Weak investor sentiment

Bluplast Industries was forced to pull out its Rs 30-crore IPO due to weak investor sentiment, said Shashinand Nagori, its compliance officer. He said the company was exploring other funding options, including private placement of shares and even the debt option, to mobilise Rs 32 crore (Rs 320 million) required for the expansion plans. The Mumbai-based Allianz Securities was the lead manager for the issue.

Several recent public issues including Deccan Aviation, Patel Engineering, D S Kulkarni Developers and Unity Infraprojects are trading below the issue price. Prime Focus, which came out with an issue at Rs 417 per share, had a dismal opening day on Tuesday. Investment bankers said that good issues would sail through despite weak market sentiment.

For instance, Allcargo Global Logistics' IPO, priced at Rs 675 per share, was oversubscribed by seven times when the issue closed on June 6. "We don't see any problem for good IPOs. They will attract interest from investors," said an official of Enam Financial Consultant, the lead manager for Allcargo Global's IPO.

IPOs slated to hit the market in the next couple of months include DLF, MCX and Power Finance Corporation.

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