Prithvi Haldea, the chairman and managing director of Prime Database talks about the expectations from and realities of IPOs in India.
Haldea says the appetite for IPOs in India is virtually unlimited and that contrary to popular belief there isn’t a limited amount of money available for good IPOs. However, he says that the enthusiasm generated for a particular IPO depends on how good the company is, the price of the IPO, and what investors are looking for. He says that while investors are on the lookout for IPO opportunities, what’s on offer has to be attractive.
Statements from the government about disinvestment have disappointed Haldea. He says that while government officials say they are nervous about listing on the markets and say they want to get maximum value for their IPO disinvestments, they should also look at the larger picture.
According to Haldea, the government can use its disinvestment programme as one way of bringing back confidence to markets. He says that while some amount of discounting in pricing won’t hurt PSUs, it will benefit the larger public.
Haldea adds that PSUs also tend to benefit a great deal when they get listed on the stock markets. He says his organisation conducted a study that found that four PSUs made valuation gains of up to 200% after they were listed.
The four PSUs in the study were Power Finance Corporation, Power Grid Corporation, Rural Electrification Corporation, and NTPC.