NATIONAL

IPOs pick up after Shourie's ire

NEW DELHI, FEB. 26 . The initial public offerings (IPOs) of major public sector companies saw an improved investor response today, a day after the Government went public with the charge that it was aware of `certain players' pulling down the scrips of the companies which had entered the market. Even the IPO of IBP, which had seen just about three per cent response till Wednesday, saw greater investor response today and this led the Government to express confidence about the success of the issues.

The Disinvestment Minister, Arun Shourie, yesterday said that certain players were bringing down the market on the `misplaced' understanding that the discount on the price of these scrips would be based on the last day's trading price. Mr. Shourie had not only given vent to his anger, but had also taken up the matter with the Prime Minister, Atal Bihari Vajpayee, and the Finance Minister, Jaswant Singh. The Prime Minister reportedly told the financial advisers to the scrips that the success of the IPOs would be a test case of their competence. The Securities and Exchange Board of India (SEBI) too started looking into the trading pattern of certain scrips and the overall market behaviour in the last few days.

While closely monitoring the performance of the IPOs in the market today, Mr. Shourie had a wide range of consultations with experts in market affairs. This included the Chairman of the Telecom Regulatory Authority of India (TRAI) and former Disinvestment Secretary, Pradip Baijal.

Mr. Shourie also had a meeting with the chief of the Intelligence Bureau, K. P. Singh, sparking speculation about the possible course of action that the Government might take against those players who were pulling down the scrips. However, Mr. Singh clarified that "I deal with terrorism, not markets." Mr. Shourie also declined to provide details of the meeting.

Quoting preliminary reports after monitoring the market, Mr. Shourie said that bids for as much as 85 per cent of the 57.58 lakh IBP shares put on the block were received till the evening of the fourth day, as against less than one per cent bids in the first three days after the issue opened. Reports also suggested that the CMC issue was oversubscribed to the extent of four times while the IPCL bids were 2.3 times the offer size.

In the case of the Dredging Corporation, which entered the market today, bids totalling 26 per cent of 20 per cent government equity put up for sale were received.

The Minister attributed the surge in response to the public offers to his tough talk with financial advisers and subsequent interactions the SEBI chief had with the merchant bankers who were working as book builders and lead managers for the issues.

Mr. Shourie discounted reports that institutions such as LIC and GIC were asked to pick up the shares leading to high subscriptions today. No such support was needed as private investors had responded with confidence.

Reiterating that the merchant bankers were obliged to ensure that the issues were successful, he said there was no need to change them.

"The most important thing is everyone knows that we know," he said, referring to his statement that the Government knows those pulling down the scrips.