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IPOs Explained

Excerpts IPO

CDSL to go for an IPO

(Disclosure:I am market making in BSE)

The Bombay Stock Exchange plans to sell a part of its stake in Central Depository Services (India) Ltd through an initial public offer (IPO), three people with direct knowledge of the development said.
The exchange has to bring down its holding to comply with the Securities and Exchange Board of India’s norms on ownership in market infrastructure institutions.

The IPO will value the company at around Rs 700-750 crore, these people said.

“The boards of directors of BSE and CDSL have approved the proposed initial public offering plan,” an investment banker said.

BSE will now hire bankers to manage the issue and is looking at a listing by the end of the current financial year, people quoted earlier said.

As on April 30, CDSL managed 8,772,884 accounts with securities of Rs 11.28 lakh crore. Stocks and securities of around 14,738 companies are being managed by the depository.

BSE, Asia’s oldest exchange, holds 54.2% in CDSL and needs to trim it to below 24% to comply with Securities and Exchange Board of India’s norms on ownership and governance of market infrastructure institutions. –from ET

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Chart:What if you had invested 1000 $ in these Internet IPOs?


Retail investors shun Repco Home Finance IPO

I had linked earlier to a Bloomberg article which mentioned how the retail investor in India is pulling out of the Indian equity markets.

If further proof was needed, the IPO of Repco Home Finance provided it.

Typically, when markets are near new highs, we have retail investors making a beeline for IPOs wanting to flip it to make a quick buck.

The market sentiment is so negative amongst retail investors that nobody seems to be interested in IPOs.

Repco’s IPO was woefully under subscribed by retail investors-they subscribed to only 0.51 of the offered book.HNI’s only subscribed 0.37 times the book and employees subscribed by 0.57 times.

The book’s lead managers SBI Caps,IDFC and JM Financial appear to have done a woeful job in pricing the issue which had to be bailed out by institutional investors.

What is funny is the “Ra Ra” attitude of the Main Stream Media-an article in MoneyControl states that Repco IPO is fully subscribed without mentioning the dismal participation of the retail investors.

What I also find interesting was the “Subscribe at the Upper band” recommendation given by many august brokers/publications-Angel,Sharekhan, ICICI etc

Memo to investment bankers/brokerage houses:Better luck next time !!