Money on the markets

Disappointing start to IPO season

Oil India Ltd’s ads in newspapers and business glossies may help in building a much-needed tempo before its public offering of shares, but if the disappointing listing price of Adani Power and NHPC is any cue to go by, then the days ahead for costly IPOs may not be worry-free.

The energy explorer, which deferred an IPO last year amid the global financial crisis, has lined up a $500-$600 million public offering which will open on September 7 and close on September 10. The price band has been set at 950 to 1,050 rupees a share.

Several firms, including state owned, are considering share sales to fund expansion in Asia’s third-largest economy.

First off the block with an IPO was private power producer Adani Power. Its shares are hovering around the issue price of 100 rupees since day one — a reminder of the stock market debut by Anil Ambani’s Reliance Power, which raised almost $2.9 billion in India’s largest-ever IPO in early 2008 but has not closed above the issue price.

Investors and the IPO craze

The UPA government’s deferred divestment programme seems to have had a smooth take-off. State utility NHPC’s IPO was subscribed 23.5 times at close.

This is to be followed by an offering from another state heavyweight, Oil India Ltd, on September 7. But what do these high decibel IPOs mean for the stock market and small investors in particular?