During the month of March there were three IPO’s, where one has listed and the remaining two are still some time away from listing. The three IPO’s under discussion are Ortel Communications Limited, Adlabs Entertainment Limited and Inox Wind Limited.
Details of the issues are given below.
| Ortel Communications | Adlabs Entertainment | Inox Wind | |
| Price Band | 181-200 | 221-230 | 315-325 |
| Revised to 180-215 | |||
| Issue Size Fresh | 60 lac shares | 183.26227 lac shares | Rs 700 crs |
| Issue size offer for sale | 60 lac shares | 20 lac shares | 1 cr shares |
| QIB Portion | 75% | 75% | 50% |
| Anchor investor bucket | Upto 60% of QIB | Upto 60% of QIB | Upto 60% of QIB |
| Anchor investor allotment | 28.40% of QIB | 17.85% of QIB | 60% of QIB |
| Anchor Price | lower price band 181 | lower price band 221 | higher price band 325 |
| Subscription | |||
| QIB | 1.01 | 1.17 | 35.68 |
| HNI | 0.09 | 0.49 | 35.38 |
| Retail | 0.39 | 1.37 | 2.15 |
| Total | 0.75 | 1.11 | 18.6 |
| Listing | 171.95 down 5% | Yet To list | yet to list |
In the case of Ortel Communications the merchant banker has invested in the form of two entities namely Kotak Mahindra Bank 26.7375 lac shares and Kotak Mahindra Old Mutual 6.075 lac shares. The total from Kotak is therefore 32.8125 lac shares from a final allotment size of just about 96.80 lac shares including the anchor investor portion. Whether one would call this a bail out or by any other name is for you to choose.
The case of Adlabs Entertainment had a price band of Rs 221-230 and everybody felt that the pricing was very aggressive. As is the usual comment by esteemed and experienced merchant bankers they had done extensive marketing and the feedback received decided the price. We saw the response from anchor investors and the public whether they are institutional or non-institutional. The price band was reduced from Rs 221-230 to Rs 180-215. The issue would be priced at the lower band of Rs 180 at which price the discount is Rs 41 or 18.55% from the lower price band of Rs 221-230. Clearly it’s a tough bargaining game and one only hopes there is wisdom and learning from these experiences.
Looking at the varying levels or degree of success or failure of each of the issues is a learning curve for all concerned. Investors are wary of business model where existing players are not making money or the business seems faulty. Secondly pricing is the key and the days where anything new was more valuable than an existing old company does not hold well currently. Thirdly retail investors will take a risk and at best invest in one lot if there is a discount and the issue would trade in continuous trade mode and not trade to trade.
Its time our merchant bankers took heed of the ground realty and refrain from very aggressive pricing and make the same affordable so that there is a reasonable chance that investors may make some money taking a risk and investing in primary market.
The financial year 2014-15 is coming to an end and one hopes and prays that the primary markets remain buoyant in the coming year. The nation needs capital building and raising for its ambitious projects and if we all as intermediaries, associates and whatever name we choose to call ourselves provide the right inputs, things will not only happen but happen well.
The proof of the pudding is in the eating and the success or failure of the three issues is in front of you.
