Mumbai: Making a lacklustre debut on London Stock Exchange, the shares of Essar Energy Ltd plummeted on the first day of trading after the company raised $1.95 billion (around Rs8,700 crore) in an initial public offering (IPO).
Essar Energy dropped 23.75 pence to 396.25 pence apiece, a decline of 5.65% from the offer price. The Indian power producer had decided to go ahead with its IPO, even as news of three sovereign downgrades and a volcano in Iceland affected investor sentiment in the global financial markets. To rustle up investor support, the company lowered its pricing of shares to 420 pence, from the earlier announced band of 450-550 pence.
Other commodities stocks also fell in Tuesday’s trading as the Australian government imposed a tax on resources companies such as BHP Billiton and Rio Tinto and BP Plc struggled to contain the damage from oil spills in the Gulf of Mexico.
This caused the FTSE 100 to fall 1.86%, or 103.42 points, to 5449.87 in early afternoon trade. It was an “ugly day”, said an investment banker associated with the Essar Energy IPO.