Behind the withdrawal and postponement of Emaar MGF’s Rs 6,461 crore initial public offering (IPO) — one of the largest in India — lie two questions. One, why did Emaar need to withdraw its IPO today when barely two days ago it had sought a five-day extension?

Without waiting for the extension, the company withdrew three days before its closing date of February 11. Two, why has it withdrawn on a day when its subscription level had touched 85 per cent? Bad market sentiment is only part of the story.

The answer: had the subscription level touched 90 per cent, Emaar would not have been able to withdraw its issue. But why withdraw when the money is almost in the pocket? “Given the prevailing sentiments in the capital markets, it was unclear how we would trade post-listing,” a company release stated. “It has been considered wiser to revisit the markets only when the sentiment is stable and better providing greater value to the investor.” The company plans to return to the market at a later date “when sentiment and liquidity conditions are better.”

Emaar, that aggressively hit the news circuit when it announced its IPO, had a subscription level of 85 per cent by Friday morning. It had received full subscription from QIB (qualified institutional buyers) and high net worth individuals (HNI) segments. Together, they added up to applications worth Rs 5,779 crore against Rs 6,461 crore that it stood to collect at the higher end of the issue price.

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