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India`s latest IPO -DEN - bailed out by Indias biggest Insurance firm -LIC

 Its quite amazing to note that inspite of that 90% of all IPOs in India trading at below the issue price, IPO are still getting oversubcribed. But whats more amazing is the gross under reporting by the Media ( and maybe ignorance from the public) the latest IPO from India was facing the big risk of being under-subcribed on the last day.

  • The IPO was DEN NETWORKS - a cable network operator.
  • Issue size - $ 100 Mn.or  Rs 3900 to 4100 INR Mn ( or 390 to 410 crores)
  • Price band-  Rs. 195/- to Rs. 205. Offer to total 20 mn shares.
  • valuation - at 10x book value!!. Forget about PE and there is no E. FY09 Annual loss of 150 Rs Mn ( Rs. 15 crores)
  • Global Co-ordinator and Book Running Lead Manager -Deutsche Equities India Private Limited
  • Some Brokerage/Business Newspaper views-  Indiabulls Economic Times Moneycontrol - (Indias CNBC)
  • Post issue close - Barely subscribed
  • Bailed out at last day by LIC - Indias biggest government owned Life Insurance co. that has a 65% market share. Out of the premium it collects it invests 20% in Indian equities  or around $ 10 Bn per year. Interview with the Chairman. that compares with FII inflows of $15 Bn till date into India equities.
Strangely enough ,only one news article if you google with the keywords "Den Networks LIC" and that news is from Reuters - IPO fatigue hits asia
Now 2 questions :
  1. if LIC bailed out the IPO ( within the offered price band at no discount), did it act in the interest of its investors ? Where is the accountability here ?
  2. or Was it just gambling with public money ? Also doesnt this amount to market manipulation by trying to save an IPO so that the IPO pipeline of $30 Bn sails through and the impact on Secondary market is minimised?