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.
Now 2 questions :
- 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 ?
- 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?