SBI Card and Payment Services Limited which is tapping the capital markets with its fresh issue of Rs 500 crs and an offer for sale of 13,05,26,798 equity shares completed allocation to anchor investors. The price band of the issue is Rs 750-755. The company allotted 3,66,69,589 equity shares to 74 anchor investors which included 12 mutual funds who have been allotted shares in 48 schemes.

The highest allocation has been made to HDFC Mutual Fund who has been allotted 20.53 lac shares. The top seven anchor investors have been allotted about 40% of the anchor book. This is an extremely fair and well distributed anchor allocation and is not skewed in any manner as has been seen in many other issues.

The issue opens on Monday the 2nd of March and closes on Wednesday the 3rf of March for QIB investors. It closes on Thursday the 4th of March for all other investors which include HNI’s, Retail, Employee and Shareholders.

The leveraged HNI has been allowed to bid in either the shareholder category or HNI category. The distortion in allocation of the shareholder category will be visible when allotment is made and almost the entire allocation would be made to a handful of shareholders. Hopefully after the same is visible the regulator and the promoter of the company would realise what they have allowed and been unfair to the large over 19 lac shareholders of the bank.

The full list of anchor investors with their allotment is given below: –

The Week gone by saw markets lose on three of the four trading days and register small weekly losses at close. BSESENSEX closed the week with losses of 87.62 points or 0.21% to end at 41,170.12 points. NIFTY was down 32.60 points or 0.27% to close at 12,080.85 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.17%, 0.08% and 0.06% respectively. BSEMIDCAP gained 0.21% while BSESMALLCAP was up 0.44%.

The top gainer in the benchmark indices in individual stocks was Zee which gained 7.58% while the top loser was Yes Bank, down 8.87%. The Indian Rupee lost 25 paisa or 0.35% to close at Rs 71.65 to the dollar. Dow Jones lost 405.67 points or 1.38% to close at 28,992.41 points.

The week ahead sees US President Donald Trump begin his flying visit to Ahmedabad, followed by Agra and then the business part of the meeting in Delhi. With the back drop of heightened tensions between China and US on the trade front and not helped in any manner by the outbreak of Coronavirus, both countries will look to India becoming a manufacturing hub. While markets have not anticipated any events happening there is a buzz as Trump visits the world’s largest cricket stadium for a rousing reception.

This would be followed by February futures expiring on Thursday the 27th of February. The current value of NIFTY at 12,080.85 points is higher by 45.05 points or 0.37%. The lead is slender and in a volatile week could go in either the direction of bulls or bears.

A large and much awaited IPO from SBI Cards and payment Services Limited would be opening for subscription by Anchor Investors on Friday the 28th of February. The main issue would open on Monday the 2nd of March and close for QIB’s on the 4th of March and for HNI’s, Retail and Shareholders on 5th of March. The issue consists of a fresh issue of Rs 500 crs and an offer for sale of 13.05 cr shares. The price band would be announced on Tuesday, the day the company kicks of its roadshow in Mumbai. The street expects a price band of Rs 750-755, while I believe this would be lower. The market cap of the company going public at the above expected price would be in excess of Rs 90,000 crs with SBI holding 74% shares.

One wonders why the company has played unfair with shareholders of State Bank of India. It has allowed HNI applications and would thus ensure that this quota gets cannibalised by HNI’s who will borrow money and put in applications for the entire shareholder quota and disturb the complete demand for the category. This move by the company is against the interest of small shareholders which is a very large number, SBI being the largest bank by breadth and reach in the country. I am sure post the allotment of this category even those people who agreed with the decision of allowing HNI applications will have regret on their decision. I also hope SEBI looks into this issue and does not allow issuers to trample upon the right of small shareholders.

While this issue would do well, one needs to ponder whether State Bank of India becomes an attractive investment or not. The bank has a market capitalisation of Rs 2.92 lac crs. SBI Life has a market cap of Rs 92,795 crs where SBI (State Bank of India) has 62.80% shareholding. To this if one adds a notional 65,000 crs of SBI cards we are talking of Rs 1.57 lac crs for just these two companies as SBI share. This leaves the bank with a valuation of a mere 1.35 lac crs. Even considering holding discount, the bank valuation is just too attractive to ignore. With AMC business in demand, it would be a matter of time after UTI AMC hits the market, SBI AMC would follow.

Following close on the heels of SBI Card is the issue from Antony Waste handling Cell Company Limited which would be tapping the capital markets with its offer for sale and a small fresh issue. The company as the name suggest, is in the business of collecting and transporting waste and also the composting and treatment of such waste.

From the primary market perspective, SBI Cards would act as a catalyst for the markets and help many more companies waiting on the side-lines to actually get the courage to tap the markets.

Sterling and Wilson Solar continues to be in the news for all the wrong reasons. The company declared a massive dividend of 600% (Rs 6 per share of face value Re 1) and thought the minority shareholder would be appeased with the generosity. The company thought that this action would kill two birds with one stone. The first being that minority shareholders would be happy and second that the bulk of the dividend (77.22% is promoter shareholding) would come back to them. Markets did not like this as the business of the company is under pressure and is affected with supply issues post Coronavirus. The key takeaway from this ongoing saga for the management of Sterling and Wilson and other companies is that they must be straight forward and place facts as they are. By being extra smart, it just does not help.

Contrary to the management’s expectation. The share price tanked further and made a new 52 week. The share lost Rs 47.80 or 17.38% to close at Rs 227.20 against an issue price of Rs 780.

Coming to the markets, expect them to remain volatile ahead of Trump’s visit followed by expiry. On a net basis there may not be a significant change on a weekly basis, but intraday moves could be sharp and swift. Use any sharp dips to buy and sell on strong rallies.