December 02, 2008

RITES to postpone IPO plan

BS reported that RITES Limited has decided to postpone its initial public offering of 10 million equity shares in the wake of high volatility in the domestic equity market.

A ministry official said that during the first week of June 2008, railway board and RITES officials held a meeting to review the progress of the IPO process, in which it was decided to postpone the public issue for the time being. In the review meeting, railway officials said that certain pre IPO transactions, which have to be finished before June 30th 2008 are unlikely to get completed before the stipulated time. Hence, they decided to postpone the issue. Apart from that, the prevailing weak market conditions also prompted RITES officials to rethink their IPO plan.

Mr VK Agarwal MD of RITES said that "The domestic equity market has been quite volatile during the last few months. Initially, we expected the situations to improve, but it did not happen. The market continues to be highly volatile and we decided to postpone the issue for the time being."

Another RITES official said that "All other required process for the IPO will continue to take place. When the equity market becomes stable, we will take a final call on the issue."

It may be noted that RITES proposes to issue 10 million fresh equity shares through its IPO in addition to another 4 million shares by way of divestment of the government's 10% stake in the company that will bring down the government's total equity stake in the company to 72%.