Bangalore: State-owned firms raising funds through public issues haven’t been able to attract even their own employees since last year.
Employee participation in initial and follow-on public offerings (IPOs and FPOs) by state-owned firms since 1 January 2009 was less than one-third of the portion reserved for them, financial services firm SMC Capitals Ltd said in a report on Tuesday.
India’s largest iron ore producer NMDC Ltd’s FPO in March, for instance, was subscribed just 0.07 times in the employee category, SMC said in its report.
Overall response by retail investors in recent large public issues of state-owned firms has been poor. But employee participation has been particularly low since early last year.
Before that, NTPC Ltd’s IPO in 2004 was subscribed 1.88 times by its employees. Power Grid Corp. of India Ltd’s IPO in 2007 was subscribed 2.66 times by employees.
“Valuations are sharp and IPO pricing (now) is very high and may not seem very attractive to retail investors,” said R. Balachander, partner and national IPO leader at audit firm Ernst and Young India. “Earlier, people were able to cash (in) on the premium listing of ‘navratna’ companies.”
Public firms with the ‘navratna’ status have more financial autonomy than other state-run companies and can take decisions on large projects without referring them to the government.
The amount reserved for employees of state-run firms in public issues since the beginning of 2009 was around Rs573 crore, of which just 37% was subscribed, SMC said.
“There is a problem with the ability of PSU (public sector unit) employees to invest considering their salaries, which can restrict their aptitude for investments,” said Jagannadham Thunuguntla, equity head, SMC Capitals.