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Mumbai-based Gemini Engi Fab has called off its initial public offer on Monday, a day before its scheduled opening.

The Rs 44-crore issue was slated to open on Tuesday and close on Friday.

Poor response from qualified institutional buyers (QIB) is the main reason cited by he merchant banker for the cancellation of the issue.

Even a week ago, company officials and merchant bankers to the issue were confident that the issue would go through smoothly despite current dull market conditions. "It looks like as if the markets have stabilised at the moment and we have also priced the issue at a very decent level," Mr Sharad Rathi, Head-Marketing and Origination (Investment Banking), Almondz Global Securities (BRLM to the issue), had said at a press conference announcing the details of the issue last week.

The company had earlier postponed the issue by a month and a half and the price band was reduced substantially. "In the initial stages, QIBs showed interest in the IPO but now with the market tanking again they have backed out and they expect the markets to sink further," said an official with the merchant banker. He said that the company will enter the market at a later stage when things look better.

The company planned to issue 55 lakh equity shares at a price between Rs 75 and Rs 80.

The proceeds from the issue were to be used to part-finance the company's expansion plan of setting up a manufacturing workshop at Umbergaon in Gujarat. The proceeds were also to be utilised for the company's general corporate and issue expenses.

Up to 50 per cent of the issue was reserved for qualified institutional buyers, 35 per cent for retail investors and 15 per cent for non-institutional investors.

EdServ on
Meanwhile, EdServ another company which announced its IPO said that it would go ahead with its issue which is scheduled to open on Friday. The company has good QIB support and the retail interest is also good. As of now the IPO is on, said an official with the merchant banker to the issue.

Market conditions have not changed, they are the same what they were a few months ago. Investors are still wary about investing in the primary market, said Mr Prithvi Haldea, Managing Director of Prime Database.

There has not been an IPO since last October. Gemini Engi-Fab would have been the first issue to hit the market in four months, reports The Hindu Business Line.

Source: Moneycontrol.com