Investments go awry, $4.38 bn lost in two yearsFebruary 2nd, 2009 - 8:03 pm ICT by IANS
New Delhi, Feb 2 (IANS) The ongoing turmoil in Indian equities markets has resulted in investments by financial institutions turning red, with about $4.38 billion washed away between September 2006 and January this year, said a brokerage firm’s report released Monday.Market value of about $6.5 billion worth investments made under the qualified institutional placement norms in September 2006 has reduced to $2.12 billion by January 2008, said the report by the Delhi-based SMC Capitals, India’s fourth largest share brokerage firm.
“Most of these investments happened under a bull market euphoria and at peak levels,” said Jagannadham Thunuguntla, chief executive of SMC Capitals.
Real estate is the worst-hit, with 88.08 percent of the money invested losing its value in what many term as the “most difficult times ever”.
According to the report, $153.17 million invested in the Delhi-based realtor Ansal Properties and Infrastructure (API) in September 2006 has lost 95.65 percent of its value and was worth only $6.65 million in January 2008.
API’s scrip dropped from Rs.505 per share in 2006 to Rs.24 per share now.
Another infrastructure developer, Mahindra Lifespaces, has also turned to be a bad bet for investors as $105.01 million invested in the company during the same period was worth only $16.66 million in January 2008, a drop of 84.14 percent in value.
Media companies also did not fetch good returns, with value of such investments falling 75.29 percent in the period under consideration.
The erosion in wealth was there across sectors but differed in magnitude. The BFSI (banking, financial services and insurance) sector lost about $1.29 billion, while the energy sector suffered a loss of $709 million.
Citi group, State Bank of India, Fidelity and ICICI Ventures are the leading losers in the financial sector and they might find it too difficult to recover the investment fully, the report said.
“Chances of recovery are dim and it may take as long as three to four years,” Thunuguntla said.