Bharti Infratel Limited (BIL) which had tapped the capital markets with its IPO for 18.89 crs in a price band of Rs 210-240, announced the issue allotment price at Rs 220. The retail investors would be allotted shares at Rs 210 after a discount of Rs 10. Anchor investors were allotted shares at Rs 230 and would therefore have incurred a notional loss of Rs 10 even before the share lists for trading.

The issue managed to get subscribed through institutional support and HNI’s and retain did not subscribe to the issue fully. Less than 22% of the reservation for this category was subscribed indicating the poor response from individual investors. The price fixed at Rs 220 is significant as this is the rupee cost of the PE investors who had invested approximately five years ago. The exact rupee cost was Rs 219.38 and they have suffered a currency loss of roughly 35% as the Indian Rupee depreciated from Rs 39-40 to the current Rs 54-55.

Even at this value the PE investors are offering for sale 4.266 cr shares. Retail investors are maturing and are very clear that they make take risks but are not willing to lose their shirt. In an issue where PE investors after five years have lost on currency and made no money on their investment, have decided to shun the issue. It should be noted that 13 Investment Bankers and three Syndicate bankers were not enough to garner significant or meaningful response in the issue. This certainly speaks volumes about the company, its prospects and the ability of the merchant bankers and the promoters in offering value to investors. One is sure that the price at which the shares would be issued are likely to slip into negative territory once the issue lists in the last week of the calendar year 2012.

One hopes that with even the government realising that proper pricing is a key, private issuers of capital also realise this basic principle as quickly as possible.