UPDATE 1-India's Wockhardt Hospitals shelves IPO
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MUMBAI, Feb 8 (Reuters) - India's Wockhardt Hospitals Ltd has shelved its initial public offering, becoming the first Indian listing hopeful to pull its deal as market turbulence saps appetite for risk.
Analysts said conditions would be tougher in India's markets from now on but that companies looking to list could still attract investors if they priced their offers more moderately.
"Now, perhaps good sense will prevail -- at least until the markets bounce back," said Sandeep Shah, chief executive of Sampriti Capital.
A total of 21 IPOs worldwide, worth a combined $6.3 billion, were pulled in January due to volatile markets, according to Thomson Financial.
In the same month India saw its biggest ever offer, a giant $3 billion IPO from Reliance Power, oversubscribed 73 times.
India's stock market soared 47 percent in 2007, its fifth year of a bull-run, and had $15.8 billion initially in the IPO pipeline for 2008 -- more than double the size of last year.
Concerns that the credit crisis would trigger even deeper write downs for banks and financial institutions and a looming U.S. recession have caused many companies in Asia to shelve IPOs.
Market turbulence, which has sent India's benchmark index .BSESN 14 percent lower so far this year, makes it difficult for companies and potential investors to price IPOs.
Emaar MGF Land, the Indian joint venture of Dubai's Emaar Properties EMAR.DU, which aims to raise up to $1.64 billion, had to cut its price band twice and extended its IPO by three days to Feb. 11.
Healthcare services provider Wockhardt said late on Thursday it was pulling its offer to raise up to $165 million after it got subscriptions for only a fifth of the offering of 25.1 million shares. The company had extended the period and cut the price after initially hoping to raise up to $197 million.
By sharp contrast, Reliance Power's (RPOL.BO) issue was lapped up in one minute and attracted bids worth $190 billion.
The IPO was priced at the top of its price band at 450 rupees per share and traders expect it will list at a premium of at least a third on Monday.
WAITING IN THE WINGS
The Reliance Power deal makes India the largest IPO market in the world so far this year and Thomson Financial says it has helped India garner nearly half the world's IPO proceeds for the year to date compared to just 3.7 percent a year ago.
Major IPOs in waiting include a $1.5 billion offer from the tower unit of mobile firm Reliance Communications (RLCM.BO), a $500 million issue from mutual fund firm UTI Asset Management, and a $635 million offer from Bharat Oman Refineries, a venture of Bharat Petroleum Corp (BPCL.BO) and Oman Oil Co.
"There is still an appetite for good quality issues at reasonable valuations," Shah said.
"What we won't see is the kind of gross overvaluations and dramatic oversubscriptions we've seen, as institutions will be cautious and retail investors have lost money."
Emaar MGF had received subscriptions for 84 percent of the 102.57 million shares by 0730 GMT on Friday, mostly at the lower end of the price range of 530-630 rupees ($13.4-$16), National Stock Exchange data showed.
Enam Securities and DSP Merrill Lynch MER.N are the global coordinators.
IRB Infrastructure Developers on Wednesday priced its offer of 51 million shares at the lower end, at 185 rupees a share.
Foreign funds, buyers of a record $17.4 billion in Indian equity in 2007, have sold about $2.5 billion net in shares so far this year.
"We are seeing some caution in the secondary market, and that sentiment is rubbing off on the primary market, as well," said Sanjay Sinha, chief investment officer at SBI Funds Management, where he oversees about $7 billion in assets.
"Because of a contraction in risk appetite globally, liquidity is constrained. There is also uncertainty relating to a possible U.S. recession and the subprime fallout," he said. ($1=39.5 rupees) (Editing by Himangshu Watts, Charlotte Cooper & Louise Heavens)
