The pipeline for new public offers (IPOs) hitting the market in the next two-three months is almost empty, but a slew of delisting offers is lined up in coming days.

Lack of investor appetite, state elections and the Union Budget is likely to keep most companies reluctant from coming out with their initial share sale offers at least till March-end, experts say. The Securities and Exchange Board of India (Sebi) crackdown on seven newly-listed companies last month for alleged IPO-related irregularities will also ensure that smaller "managed" issues will not come to the market soon, they add.

The government, which was forced to defer its stake sale plans in state-run companies like ONGC, SAIL and Hindustan Copper last year, is also unlikely to tap the primary market to meet its disinvestment target of Rs 40,000 crore (Rs 400 billion) for the year ending March 31.

"I don't think there will be any activity in the primary market in the next few months. Smaller issues will be afraid to come after Sebi's crackdown," said Jagannadham Thunuguntla, strategist and head of research at SMC Global Securities.

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"The government is also likely to choose the institutional placement or auction route to reduce its stake in PSUs, rather than through follow-on public offers."

Early this month, Sebi allowed companies to bring down their promoters' stake for meeting the minimum public shareholding requirement through institutional placement or selling shares via a separate stock exchange window.

The stock market turmoil forced at least 28 companies to cancel their IPO plans to raise Rs 32,000 crore (Rs 320 billion) in 2011, according to SMC Global. The Bombay Stock Exchange (BSE) benchmark, the Sensex, lost about 25 per cent of its value last year.

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The outlook for the market is weak till at least March-end as investors grapple with slowing growth and lack of government reforms in India and worsening debt crisis in the euro zone. Poor returns from IPOs are also hurting investors' sentiment, experts say.

"Investors haven't made money in public issues. There are suspicions that some of the issues were pre-sold to select individuals depriving genuine investors. The secondary market is also not doing well," said Arun Kejriwal, director at Kejriwal Research and Investment Services (KRIS), who keeps a close watch on the primary market.

As of Friday's close, investors' wealth has eroded by Rs 10,000 crore (Rs 100 billion) in 103 IPOs that came in the last two years, according to data compiled by BS Research Bureau. Nearly two-thirds of these companies' shares are trading 30 per cent below their issue prices.

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Delisting offers

In contrast, Dalal Street is buzzing with delisting offers. Walt Disney's delisting offer of Rs 835.03 – 1,000 a share for UTV Software shares will open on Monday and close on January 20.

The Khorakiwala family, promoters of Wockhardt, will also launch a delisting offer for shares of group firm Carol Info Services during the same period. Japanese auto component maker Exedy Corp will launch delisting offer for its unit Exedy India, which is listed on BSE, between January 24 and January 31.

Sweden-based Alfa Laval Corporate AB has announced plans to delist its unit, Alfa Laval India, from domestic bourses by offering Rs 2,850 a share to public shareholders.

US-listed software firm iGate in November said it would delist shares of its unit, Patni Computer Systems, by offering a minimum Rs 356.74 a share to public shareholders.

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Patni shares last closed at Rs 472.95 on the NSE, meaning investors are expecting a much higher price.

Several other multinational companies (MNCs) are also expected to come out with delisting offers for their Indian units in the next few months.

"A lot of MNCs don't need to come to the capital markets for raising money. It makes sense for them to delist their shares, as stock prices are attractive at present," said Pankaj Pandey, head of research at ICICI Direct, an online broking arm of ICICI Securities.

"Even investors can benefit from delisting offers as there is a possibility of locking in better returns."

ICICI Direct counts Oracle Financial Services, Novartis, Honeywell Auto, Thomas Cook, Singer, Gillette, Astrazeneca Pharma, Blue Dart, among others, as probable candidates.