Market regulator SEBI today said it has become challenging for the companies to raise money from the capital markets and there is a significant weakness in the IPO segment in India and other Asian countries.
Tough market conditions are also throwing challenges before the companies to get good investments, while weakness in primary market is also making the exit difficult for pre-IPO investors, SEBI Chairman U.K Sinha said.
“There are challenges on raising money, on exits and on getting investments at good prices. Primary markets have seen substantial decline in India and Asia,” he said here during a global conference on venture capital investments.
Amid weak market conditions, the private equity funds, venture capital players and other investors tend to avoid making investments in the companies, as their exits through subsequent Initial Public Offers (IPOs) of these firms become difficult.
The IPO market has been going through difficult times for quite some time and there were only three IPOs, together worth only about Rs 928 crore, in the first two months of the current fiscal 2013-14.
Prior to that, the entire 2012-13 witnessed a total of 49 IPOs for a collective amount of over Rs 15,000 crore, while the fiscal 2011-12 saw 108 IPOs worth Rs 12,800 crore.
In comparison, the fiscal 2010-11 had recorded 80 IPOs worth a total amount of more than 57,000 crore, while there were 72 IPOs worth about Rs 55,000 crore in 2009-10.
Sinha also said that SEBI is relooking at delisting regulations for the companies looking to delist their shares from the stock market.
“The work has already begun on this front,” he said.