New Delhi: After hitting 21,000 in January, the Indian markets have plummeted to 9000 levels in December. With the reversal in market fortunes, Indian companies also saw their sources of capital drying up.
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He points to IPOs as a case in point. In 2008, IPO volumes fell by 51% to around Rs19, 360 crore (till 10 December). This was against nearly Rs40, 000 crore that companies raised via IPOs in 2007 as per a study by NexGen Capitals. In case one was to exclude Reliance Power’s 12, 000 crore IPO, the decline would have been even sharper.
Many companies like Wockhardt Hospitals, SVEC Constructions, Oil India and Emaar MGF deferred their IPOs as well. Haldea says that this was because companies did not want to bring out IPOs at lower valuations. “But many companies are desperate for money now,” he says. He expects that in 2009 one may see companies accepting lower IPO valuations.
Haldea also holds that FIIs will stay away from the Indian markets for now. However, companies may be able to raise money by issuing corporate bonds, a source of fund that has not been much in use till now.