JSW Energy Limited had launched its IPO to raise Rs 2700 crs in a price band of Rs 100-115 with a discount of Rs 5 to retail investors. The issue did not garner adequate response from HNI’s and retail investors. In market parlance, the issue was bailed out by LIC who put in an application of roughly 1900 crs. This helped with the application of roughly Rs 700 crs from ICICI helped in the issue being subscribed. The issue has been priced at Rs 100 for all categories other than retail and at Rs 95 (double digit pricing) for retail investors.

At the time of the issue analysis, I had mentioned that this was a great company but the pricing was very aggressive and therefore made the issue unattractive. Having fixed a price band of Rs 100-115, getting anchor investors in at Rs 110, and then having to price the issue at Rs 100, indicated that the company and its merchant bankers failed to read the market completely. They did not have a feel of the market and were completely wrong in their assessment. The word power generation is taboo and this would now become the fourth power company to have had a disaster at the markets in a short span of 5 months.

I hope the merchant bankers who have to come back to the market with many more issues including a few more from power generating companies learn from this setback and price issues more competitively, leaving something for the investor on the table.

2009 has not been a good year for the primary markets and it would be a good idea to leave better things for the next year where we can hope for a brighter and more fruitful year. It would be my humble request to the merchant bankers of JSW Energy to list the company during the remaining days of the calendar year so that we may not have to start the new calendar year 2010 on a bad footing.