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Journalism of Courage
MUMBAI, JUNE 2: The sagging primary market seems to be gearing up for increased activity with a large number of software companies planning to tap investors’ funds with their initial public offerings (IPO). Analysts are also fearing the entry of shady promoters who have floated dummy software companies to raise money from the public.
The phenomenal capital appreciation which have been offered by these companies is now drawing increasing attention to this sector not only of the retail investors but also of FIIs as well as mutual funds, some of whom have even floated IT specific funds.
Unfortunately, Prime fears that history seems to be repeating itself. Some unscrupulous promoters are again exploiting a euphoric condition to defraud the investors. At least 40 companies, most being NBFCs, have rechristened to suggest a software activity. While most of these scrips have already been recording handsome gains in he secondary market, the possibility of several of these companies raising capital through public and/or rights issues is quite strong.
In the overall scenario, the current fiscal may not witness any significant revival of the primary market, the reasons being investors’ apathy, stringent entry barriers and generally despondent political/economic scenario. In addition to the few software and other issues, what is, however, only certain is the continuing raising of debt by the financial institutions. IDBI and ICICI have already obtained SEBI’s permission to raise Rs 6000 crore and Rs 4000 crore respectively duringfiscal 1999-2000, while IFCI too is planning a foray in the near future.
