Investors see doubtfully to IPO

14-Feb-08. Anil Dhirubhai Ambani was very cheerful when Reliance Power Ltd. was making its debut. Investors were hoping to see the company benefit. When Reliance power launched its IPO, they fell so hard for the stock that it was the biggest demand ever for an Indian IPO.

For a few minutes, that aim seemed to be within reach. The stock started trading at a robust 548 rupees ($13.86) and Reliance watchers sighed with relief. Then the bottom fell out. By the end of the day the stock was down 17%, taking the Sensex stock index down to its third-biggest recorded drop. The stock fell another 4.9% day before yesterday.

Reliance was not the first to run into IPO problems. Last week, Wockhardt Hospitals, a thriving medical firm, cancelled a $165-million (U.S.) IPO. It was followed by Emaar MGF, a real estate giant based in Dubai that planned a $1.8-billion listing, the second largest in the property field.