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Friday, August 29, 2008

Reliance Infratel IPO deadline lapses

Reliance Infratel, the telecom infrastructure unit of Reliance Communications, is learnt to have deferred its plans for an initial public offering (IPO) because of the current volatility in the stock markets.

The outer deadline for completion of its IPO was August 11. A company has to complete the IPO process within 90 days after obtaining SEBI’s observations on its draft red herring prospectus.

Reliance Infratel had got the regulator’s approval for its proposed IPO on May 12. The prospectus was filed with SEBI on February 4.

The deadline, after which the regulator’s approval lapses, has passed without any announcement of an initial public offering by the company.

A spokesperson for Reliance Communications declined to comment on this development. It could not be ascertained whether the company would revive its IPO plans in the immediate future.

This is the third major IPO that is being deferred in recent times after that of commodity exchange MCX and mutual fund company UTI AMC. This clearly reflects the falling level of confidence among corporations and investors in the Indian financial markets, analysts said.

Moreover, all the Anil Dhirubhai Ambani Group stocks have been losing ground on the bourses. Analysts feel that the poor performance of the Reliance Power scrip, post its listing, could have also prompted the company to go cautious with the Infratel IPO. On the very day the RPower issue was listed, the scrip slipped below its offer price of Rs 450.

Reliance Infratel intended to issue 8.91 crore shares constituting 10.05 per cent of the post-issue paid-up equity capital of the company. Through this IPO, the company was expected to mop up about Rs 6,000 crore from the capital markets, reports The Hindu Business Line.

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