New Delhi: The IPO activity in the Asia Pacific region has nearly halved in the first half of this year, with two of the fastest growing economies — India and China — reporting a drop of nearly $18 billion in mobilisation of such deals.
The total capital gathered by India Inc through IPO in the first half of 2008 stood at $4.07 billion as compared to $7.68 billion in the same period in 2007, global accounting and consulting firm Grant Thornton said.
Meanwhile, data by another deal tracking firm Dealogic said IPOs by Chinese issuers have raised $15.5 billion through 103 deals so far this year, nearly half of the amount raised in the corresponding period a year-ago ($29.5 billion).
“This mirrors the wider Asia Pacific trend where issuance decreased 47% to $28.2 billion by way of 330 deals,” Dealogic added.
The slowdown of the IPO activity should be seen in the light of the fact that equity market across the world corrected sharply. While the Shanghai Stock Exchange Composite Index plunged 47.82%, the Bombay Stock Exchange benchmark index Sensex lost as much as 29.23% in the first half of this year.
“The decline in IPO activity is largely because of the current bearish trend in market condition. Equity markets have tanked so much that companies do not get good valuations.”
“In such a scenario, IPOs don’t even get fully subscribed and in some cases these firms have withdrawn or deferred their IPO plans,” Ashika Stock Brokers’s Research Head Paras Bothra said.