Mumbai: The shares of KSK Energy Ventures Ltd, power project developer and subsidiary of London-listed KSK Power Venture Plc., listed on Indian bourses at a 8.3% discount to the Rs240-a-share price quoted for the recently concluded initial public offer, or IPO.
At Monday’s closing of the Bombay Stock Exchange (BSE), KSK shares were trading at Rs190.50, down about 20.6%, while on the National Stock Exchange, the stock closed at Rs191.75, after opening with a wider gap of 12.5% at around Rs210.
At its intra-day low, KSK stock was trading at Rs176 on BSE, down some 26.6% compared with its issue price.
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Most of KSK’s senior executives, including chief financial officer S. Durgashankar, were not available for comments.
“It’s a soft market,” said the head of India equity capital market (ECM) unit of foreign investment bank, who was party to the share sale. The business model (of KSK) is good and so is its long-term growth potential, he said while not wanting to be named.
The head of ECM at a prominent local investment bank that managed the share float, also blamed the prevailing bear market sentiment in the market for the lacklustre performance of KSK stock.
“Pretty much every stock out there has lost value,” he said.
The issue was managed by Kotak Mahindra Capital Co. Ltd, IDFC-SSKI Pvt. Ltd, Morgan Stanley India Co. Pvt. Ltd, Lehman Brothers Securities Pvt. Ltd, Edelweiss Capital Ltd and Axis Bank Ltd.
By listing about 35 crore shares for public trading, KSK joins some 25 other firms, which have braved adverse market conditions to tap equity markets since February when Indian markets started heading south.
Among the 34 companies that have floated IPOs in 2008, shares of 15 have now closed at a discount to their issue price on the day of debut.
The KSK IPO, which raised Rs830.66 crore, was the fourth largest this year, which saw primary markets dry up after the $3 billion (Rs12,840 crore) share sale of another private power manufacturer, Reliance Power Ltd, whose shares continue to trade at heavy discount to the issue price.
KSK Energy intends to untilize principal portion of the IPO money raised for its 1,800MW coal-based thermal power plant project at Wardha in Chhattisgarh run by its subsidiary, Wardha Power Co. Pvt. Ltd.
Ashwin Ramarathinam contributed to this story.