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MUMBAI: eClerx Services is eyeing a mop-up of Rs 101 crore from its initial public offering which opens on December 4. The company has priced its Rs 10 share at Rs 270-315 per share in the 100 per cent book building offering. The issue closes on December 7.
eClerx Services proposes to utilise the net proceeds to fund acquisitions, infrastructure investments and for setting up additional facilities.
CRISIL has rated eClerx Services “IPO Grade 3/5”, indicating average fundamentals.
The issue comprises fresh issue of equity shares and an offer for sale by PD Mundhra, Anjan Malik and Burwood Ventures of 890,000 equity shares.
Book running lead managers to the issue are JM Financial Consultants and Edelweiss Capital.
The shares will be listed on the National Stock Exchange and Bombay Stock Exchange.
eClerx Services’ portfolio of services comprises data analytics, operations management, data audits, metrics management and reporting services. It provides service solutions using a mix of custom designed data processes with the assistance of delivery teams comprising generalists and domain specialists, and in-house software to automate processes.
The company’s unconsolidated revenues grew to Rs 86.23 crore in 2006-07 (Apr-Mar) from Rs 47.75 crore in FY06 and Rs 26.64 crore in FY05 at compound annual growth rate of 79.9 per cent. Profit after tax grew to Rs 40.52 crore in FY07 from Rs 24.04 crore in FY06 and Rs 11.22 crore FY05.
For the six months ended September 30, 2007, eClerx’s unconsolidated revenues were Rs 51.44 crore while net profit was Rs 16.47 crore.
MUMBAI: BGR Energy Systems plans to enter capital market with its initial public offering of 9,136,000 shares on December 5.
Price band of 100 per cent book building issue of face value Rs 10 is fixed at Rs 425-480 per share.
At the lower price band, the company would Rs 388.28 crore and at the cap-price it would garner Rs 438.52 crore.
BGR Energy Systems plans to utilise the net proceeds to augment long term working capital requirements, expand production capacity by establishing additional manufacturing facilities in India, China and the Middle East.
Net issue to the public will be of 8,636,000 equity shares and would constitute 11.99 per cent on the post-issue paid up capital.
BGR Energy Systems has entered into agreements with certain investors for a placement of 2,880,000 equity shares and a transfer by its promoter of 1,440,000 equity shares.
SBI Capital Markets, Kotak Mahindra Capital Company, UBS Securities and CLSA India are the book running lead managers to the issue.
MUMBAI: Even as Reliance Power's initial public offer (IPO) awaits clearance from market regulator, SEBI, a dispute has broken out among traders in the grey market, where deals had been entered into even before the issue’s price band has been fixed.
Market watchers say the situation has arisen following the company’s decision to float the shares at a face value of Rs 10 instead of Rs 2 as announced earlier.
A section of grey market operators, which had short sold Reliance Power shares in the grey market, and are staring at potentially huge losses, is using this development as a pretext to renege on their commitments. Technically, if there is a change in the face value of a share, the premium or discount will change to reflect the new face value.
Transactions in the grey market are done purely on the basis of trust and there are no documents because the activity — though widely prevalent — is outlawed in the first place.
Grey market players said some brokers in Mumbai and Ahmedabad, who initially threatened to backtrack from their commitments, have now agreed to stand by their trades. However a large number of brokers in Jaipur, who owe allegiance to a Mumbai-based operator, are said to have refused to honour their commitments.
The operator in question is said to have run up a loss of over Rs 50 crore. All these players are believed to have been selling Reliance Power shares short when they were trading at a premium of Rs 30-35 per share a couple of months back.
While the issue has been delayed, the premium in the grey market has been steadily on the rise. As a result these players have run up significant losses.
Interestingly, Reliance Power is the first instance of an IPO being traded in the grey market even before the price band has been fixed. Premium or discount in the grey market is linked to the price band. But in the case of Reliance Power, it was the purely the premium that was being traded.
“This (grey) market operates purely on faith and if that is broken, people will be wary of entering into deals,” said a broker who arranges transactions in the grey market. The deals are entered into verbally, and the shares change hands on the trading screen once they are listed.
Grey market is a thriving racket in many small towns of the country, where applicants “rent out” their permanent account numbers (PAN) and demat accounts for a fee. These applicants subscribe to IPOs, but have already handed over signed delivery instruction slips to the brokers with whom they have struck the deal. Once the shares are allotted, the broker transfers those shares into his own account.
Chennai: JSW Energy, the energy division of Rs 11,000-crore JSW Group, has decided to enter the capital markets to raise Rs 3,000-Rs 5,000 crore via an initial public offer by April 2008 to fund equity requirements for expansion. The group plans to invest Rs 12,000 crore in the energy sector in the next three years. The capex is part of the group's Rs 40,000 crore investment across sectors during the period. On the threshold of a major expansion blitz, the JSW Group, part of the $6-billion O P Jindal Group, will spend half of the total capex in the steel sector and the balance in the aluminium, cement and port sectors where the group is becoming active. Of the total investment corpus, Rs 25,000 crore will be funded through debt and the rest via internal accruals, Jindal said. For expansion in steel and power, JSW Group will utilise internal accruals of Rs 10,000 crore. With this, the O P Jindal group on the whole is looking at investing a mammoth Rs 80,000 crore on capacity expansion in various sectors over the next three years. In the steel sector, JSW will add three million tonnes per annum (mtpa) to its current capacity of four mtpa by 2008. The group company Southern Iron and Steel's (Siscol) integrated steel plant at Mechari, Tamil Nadu is poised for capacity upgadation. The group is also looking at setting up a 1,000 mw thermal power station in Tamil Nadu on an outlay of Rs 4,000 crore. Jindal said the Ennore port, with its new coal terminal under construction, would be an ideal site for the project, where capacity could be expanded to 2,000 mw when required. The project is likely to be operated by group subsidiary JSW Energy under a PPA with the Tamil Nadu government. The group is talking to the Tamil Nadu government for its various planned projects in the state, which include downstream raw material supply of iron ore from Kanchamalai in Salem and Tiruvannamalai district. Siscol will use iron ore deposits in these areas by putting up mining facilities and benefication plants at an investment of Rs 400 crore, and is awaiting clearance from the central and state forest departments. The projects will be spread over a total of 980 hectares and will generate direct and indirect employment for over 3,000 people. Additionally, JSW Steel will expand capacity at its Vijayanagar plant to 10 mtpa with the commissioning of a cold rolling mill to cater to automotive OEMs by 2010. The new capacity is expected to help JSW Steel foray into eastern Europe, Austria and Greece.
MUMBAI: Initial public offering of Kaushalya Infrastructure Development Corporation will open for subscription on Tuesday in the price band Rs 50-60 per share. The issue closes Friday.
Kaushalya Infrastructure is entering the capital market with 85,00,000 equity shares of Rs 10 each through the 100 per cent book building process.
The company plans to use Rs 17.50 crore for land acquisition, land development rights and real estate development. It seeks to invest Rs 12 crore in various projects and joint ventures. It plans to keep Rs 5 crore for construction and infrastructure equipments.
Kaushalya Infrastructure is eyeing townships, offices, houses and other buildings, urban infrastructure, highways, roads, power systems, irrigation, dams and agriculture systems.
SREI Capital Markets is the book running lead manager to the issue.
MUMBAI: The Chinese stock market boom has driven cab drivers and gardeners in China to quit their regular jobs to turn into full-time punters. If the boom in the Indian IPO market sustains its current momentum, chances are more and more people would park their savings and divert cash from business to make quick money on listing.
Already, many small- and mid-sized companies are delaying payments to their suppliers to play the market. And, well before the IPO subscription forms are available, the game starts in the grey market, which has its own rules, pricing justification and trading structure.
IPO premiums in the grey market have been soaring as the market seems to believe that any banking or loan market crisis in the US can only lead to more money flowing into India, as rate cuts to bail out institutions will improve liquidity. What is also pushing up the premium is the record subscription numbers of recent offerings.
“IPO market is mainly buzzing because of the bullish sentiment in the secondary market,” says a Mumbai-based broker who tracks the IPO grey market on a daily basis. However, he also cautions that in cases where the issue has opened for subscription, a clutch of operators often put high bids to influence the grey market price.
Cities like Kolkata, Ahmedabad and Rajkot have the most active grey markets. This is an unofficial market where trading of shares in forthcoming IPOs is conducted. A premium or discount is the market’s estimate of how much the stock of a company is likely to soar (or dip) when they are traded on the day of listing.
For instance, Edelweiss Capital is currently trading at a premium of Rs 800 in the grey market, signalling that market participants expect the issue to list at a price upwards of Rs 1,600 (The price band for the issue is Rs 725-825).
Since Sebi does not allow shares to be transferred before the day of listing, trades done in the grey market are only settled on the day of listing. In fact, the grey market has become so vibrant that a few brokers in the above cities have taken to exclusively dealing in the grey market. These brokers, often work hand-in-hand with promoters and in the process also control the prices at which issues list.
A small dip in the interest rate has also helped. Earlier most banks had reached their limits of lending for investing in IPOs. With interest rates coming down, there are more takers for IPO financing. NBFC arms of several broking houses have also taken up lending in a big way, prompting investors to flock towards IPOs.
NEW DELHI: The IPO market is getting a new glitter with jewellers from across the country lining up public issues to raise funds for expansion plans in the midst of consumers' growing appetite for luxury purchases.
Renaissance Jewellery and Shree Ganesh Jewellers are planning to raise close to Rs 400 crore from domestic market, while similar trend is being witnessed in US and Europe also.
Two other players -- PP Jewellers and Mehrasons Jewellers -- are also toying with IPO plans in the near future.
Five key players from this segment are already listed in India and the market is expecting more such issues as the surge in the consumers' disposable income is pushing up the demand for gems and jewellery products. Other than funds, the brand-value associated with a listed company is also attracting the jewellers.
"It is an encouraging trend that a lot many jewellery companies are realising the benefits of getting listed on Bombay Stock Exchange," Kejriwal Research and Information Services (KRIS) head Arun Kejariwal said.
"Raising money from equity market is easier, cheaper and faster compared to debt market. Besides, getting listed gives an 'identity' in a competitive market," he said.
"It not only brings transparency in business, but also boosts confidence to start new projects," Gems and Jewellery Export Promotion Council Chairman Sanjay Kotari said.
Mumbai-based Renaissance Jewellery, a leading exporter of studded gold and platinum jewellery is raising about Rs 80 crore via IPO. It has set a price band of Rs 125-150 a share.
The proceeds would be used to fund expansion at jewellery units in Bhavnagar and Mumbai and invest in its US subsidiary, Renaissance Jeweler New York, it said in its IPO prospectus.
MUMBAI: Lodha Developers, a Mumbai-based realty firm, plans to raise between Rs 6,000-Rs 8,000 crore through a public issue within the next 12-months and off-load 10-15 per cent stake in the process.
"Lodha Developers plans to tap the capital market to raise resources to fuel its future expansion. A sum of anywhere between Rs 6,000-Rs 8,000 crore is planned to be raised by end-2008," a source closely connected with the development said.
The realty major, which has an ambitious and massive expansion plan of around Rs 10,000 crore, will use the proceeds of the IPO to fuel this expansion, the source said.
The IPO plans are expected to be fine-tuned over the next 3-4 months. "The promoters are expected to off-load around 10-15 per cent of their stake," the source said.
The Mangal Prabhat Lodha-spearheaded group plans to use the IPO proceeds to fund expansion, which include residential and commercial projects in Tier I and II cities. This includes up-market residential projects of around Rs 2,000 crore at Walkeshwar and Prabhadevi in the metropolis.
Lodha group had recently acquired a 12.9 acre plot in Eden Square, Hyderabad, for Rs 255.42 crore, to develop a high-end commercial complex in about three million square feet area.
NEW DELHI: UTI Mutual Fund is likely to offload 20 per cent stake to "strategic partners" next month before it comes out with the initial public offer in early February.
"As much as 20 per cent would go to strategic partners which would help UTI expand its core businesses," UTI Chief Marketing Officer Jaideep Bhattacharya said.
The pre-IPO placement, which is likely to be complete by the end of December, wherein no single investor would get more than 5 per cent, he said.
About 1 crore share of Rs 10 each would be divested through private placement to the strategic investors.
UTI MF being the country's oldest fund and having large network of offices has already generated much interest from many domestic and foreign financial service providers, he said, adding, the valuation is being carried out.
The strategic investors along with capital will bring in expertise so that the company can become one-stop shop for financial needs of every customers, he added.
Besides, the fund house would divest 29 per cent of its stake through offer for sale for which Draft Red Herring Prospectus would be filed with the regulator by December.
The issue is likely to hit market in early February, he said, adding, "we have appointed seven investment managers."
JM Financial, Enam Securities and Citi are the global coordinator-cum-book running lead manager (BRLM), while UBS, Goldman Sachs, ICICI Securities and SBI Capital along with CLSA will act as the lead book-running managers.
UTI would probably become the first public listed fund manager in Asia by the end of this fiscal, he said.
MUMBAI: Jyothy Laboratories plans to raise up to Rs 305 crore through an initial public offer and said it is open to acquire companies in future to propel growth.
The FMCG company would issue 44.3 lakh shares in the price band of Rs 620-690. It would raise Rs 274 crore at the lower end of the band and Rs 305 crore at the higher end, its Deputy Managing Director K Ullas Kamath told reporters here.
The offer would constitute 30.52 per cent of the post issue paid up capital of the company. Post-issue the stake of the promoters would be 69.47 per cent.
"We intend to make acquisitions in the future as part of our growth strategy in India. We intend acquisitions which will strengthen our market position in our key product areas for our manufacturing capabilities," he said.
The company has drawn up Rs 40 crore capital expenditure plan for FY08. It plans to leverage the dominant Ujala brand with other branded fabric care products, utilise its wide distribution network and marketing expertise, improve efficiencies and manage costs and increase focus on supermarket and hypermarket sale, Kamath said.
The present investors, including Canzone Ltd, ICICI Bank Canada, ICICI Bank UK Plc, South Asia Regional Fund and CDC Investment Holdings, are selling their 44,30,250 equity shares through the IPO. The remaining stake is held by founder chairman M P Ramachandran and his family, Kamath said.
Jyothy Labs is engaged in the fabric care, household insecticide, surface cleaning, personal care and air care segments of the Indian market. It offers branded products including fabric whitener, mosquito repellent, dishwashing, bath and incense products.
MUMBAI: CARE has assigned `CARE IPO Grade 3` to the initial public offer of Cords Cable Industries Ltd. The grade indicates “Average Fundamentals”. Cords Cable is planning an IPO of 35 lakh equity shares of Rs 10 face value.
The grading reflects vast experience of Cords Cable’s promoters and management in the cable industry, consistent track record in terms of revenue and profits, diverse and reputed clientele and future potential for growth in business due to favourable outlook for power sector, CARE says.
However, the risks relating to successful implementation of on-going plus planned projects and pressure on margins due to intense competition in future are grading concerns.
Cords Cable was incorporated in Oct 1991 by three professionals, Naveen Sawhney, DK Prashar and Rakesh Malhotra, who were earlier working with Delton Cables. CCIL started its operations by manufacturing co-axial cables and instrumentation cables and its present product mix consist of low tension power cables, control & instrumentation cables and speciality cables.
CCIL currently manufactures cables up to 1.1 kv at their manufacturing facility in Chopanki, Rajasthan for various applications and caters to the requirements of industries in steel, power, chemical, cement, fertilizer, refineries. The main raw materials used are copper, aluminium, PVC resin, XLPE, GI wire, aluminium tapes, thermo couple. Raw material costs has always been a major contributor to total operating cost, thereby making profitability sensitive to their prices.
The IPO proceeds will be used for part funding the project of setting up production facilities for high tension & rubber cables, enhancement in long term working capital requirements and for general corporate purposes.
MUMBAI: Renaissance Jewellery Ltd said on Wednesday it has set a price band of Rs 125-150 a share for its initial public offering of 5.32 million equity shares, constituting 29 per cent of the post-issue paid-up share capital.
The proceeds of the issue, amounting to about Rs 799 million at the top end of the price band, would be used to fund the capacity expansion of its jewellery units and invest in its US subsidiary, Renaissance Jewelry New York, Inc.
The subsidiary would cater to independent, mid-range retailers in the US. Renaissance, which makes and sells studded gold, platinum and silver jewellery, is mainly focused on the US which accounts for over 95 percent of its revenue.
It also has retail stores in India. In FY-07, the company reported a net profit of Rs 204.3 million on a total income of Rs 3.9 billion. Edelweiss Capital is the lead manager to the issue which opens on November 19 and closes on November 21.
MUMBAI: Indian policy managers are considering amendments to primary market rules to give companies greater leeway in pricing initial public offerings (IPOs) and disclosures.
SEBI rules on pricing of IPOs stipulate that if the issue price is less than Rs 500 per share, the face value should be Rs 10 per share. If the issue price is Rs 500 or more, the issuer (unlisted) company can fix the face value below Rs 10 per share, subject to the condition that it should not be less than Re 1 no matter what.
According to sources, a proposal is set to be considered at the regulator’s forthcoming board meeting to allow firms to issue shares at a price of less than Rs 500 even when the face value of the shares being issued is less than Rs 10 per share. This needs amendments to Sebi’s disclosure and investor protection guidelines.
Besides, a change in the disclosure norms relating to financing of projects is also being considered. This pertains to the condition that no company can go ahead with a public or rights offering of securities unless firm arrangements of finance through verifiable means towards 75% of the stated means of finance have been made and disclosed in the prospectus.
A proposal to amend this clause so that the arrangements need not be disclosed in the prospectus may also be considered, the sources said. Recently, Reliance Power, which has filed its draft red herring prospectus for a mega issue, sought an exemption from the regulator to issue shares of a face value of Rs 2, though the issue price is expected to be well below Rs 500.
In its draft red herring prospectus, the company said it has mandated certain banks and financial institutions to arrange up to $6 billion in syndicated loans “for us on a secured basis to fund the identified projects”. “Although these mandates include preliminary term sheets, these term sheets are indicative only and are subject to conditions and commercial negotiations. We may not be able to fulfil all or any of these conditions or reach agreement on commercial terms with these banks and financial institutions, in which case they would have no obligation to arrange such loans for us,” the draft prospectus says.
Analysts say by issuing shares of a face value of Rs 2 and pricing it way below Rs 500, issuers can gain in terms of perception of a higher valuation. It also helps in managing liquidity in the stock by controlling the free float, say stock brokers.
Recently, the regulator granted an exemption to an issuer—Purvankara Projects—to issue shares of a face value of Rs 5 and price the offering at below Rs 500 after the company’s IPO floundered.
NEW DELHI: Mumbai-based Edelweiss Capital is coming out with an initial public offering (IPO) to raise about Rs 700 crore mainly to strengthen the operations of its unlisted securities arm ESL, which has faced several inquiries and fines from stock exchanges in the past.
The company proposes to issue 84 lakh shares in the price band of Rs 725-825 in the IPO that will open on November 15 and close on November 20, the investment banking firm said in a prospectus submitted to SEBI.
About Rs 378 crore of the proceeds will be used for upgrading the operations of the Edelweiss Securities Ltd (ESL), the prospectus says.
For its own operations, Edelweiss Capital proposes to invest Rs 57 crore from the IPO proceeds.
ESL, which will be the major beneficiary of the public issue, was on several occasions fined by the Bombay Stock Exchange, National Stock Exchange and Central Depository Services Ltd (CDSL).
"BSE, NSE and CDSL have imposed penalties in the past," the prospectus said, adding that NSE had imposed a total fine of Rs 26.3 lakh, BSE Rs 12.9 lakh and CDSL 26 penalty points.
RBI has "passed an order against our company for non-compliance with certain reporting requirements in the FEMA Regulations", Edelweiss says in the prospectus. The offences were compounded by the central bank after payment of a penalty of Rs 1.5 lakh by the company.
Even the OTCEI has imposed a fine of Rs 50,000 on ESL for "not taking prior approval for change in dominant shareholding on May, 2006."
MUMBAI: For the first time post the market regulator’s recent clampdown on participatory notes (PNs) as many as four IPOs were inviting bids on the same day.
And on a more important note, market participants, especially investment banking fraternity, were seen keenly tracking the IPOs. Thursday witnessed two initial public offerings (IPOs) open for subscription even as two others closed for bidding.
While Religare Enterprises and Barak Valley Cements saw the close of their bidding period on Thursday, Mundra Port & Special Economic Zone and Empee Distilleries began their innings on the same day.
Incidentally, a large chunk of bids in the QIB portion is generally attributed to PNs and there were concerns that Sebi’s latest move might affect the primary market. However, market sources were quick to point out that the recent clampdown on PNs failed to stop genuine bidders from participating in the IPO.
The bidding numbers did corroborate this. Religare Enterprises saw its issue getting subscribed an impressive 156.44 times, according to data available on NSE website. Bids were received for 118.52 crore shares, as against 75.76 lakh shares on offer in the price band of Rs 160 to Rs 185. Sources further add that QIB portion has been subscribed 185 times, while HNI and retail categories have been subscribed 175 times and 70 times respectively.
In the QIB category, names of Goldman Sachs, Tata Mutual Fund, HSBC Global, Merrill Lynch, Mirae Asset and SBI Life apart from the domestic financial majors were seen doing the rounds in the market. Investment banking sources further add that Religare’s performance will create a positive sentiment for Edelweiss Capital that will open for subscription on November 15.
On a different note, IPO of Barak Valley Cements which also closed on Thursday was subscribed 28.53 times. While Mundra Port & Special Economic Zone was subscribed nearly five times on the first day of bidding, Empee Distilleries saw bids for only 18,300 shares on the first day, as against 3.31 lakh shares on offer.
The QIB portion of Mundra Port has been subscribed 6.65 times. The company received bids for 16 crore shares against 2.40 crore shares on offer. Bulk of the QIB bids has come from domestic financial majors as FIIs bid for only 4.13 crore shares.
The non-institutional segment was also subscribed nearly seven times. The retail segment, which typically attracts bids only on the last day, also received bids for 2.54 lakh shares. The IPO will close on November 7.
NEW DELHI: Shareholders of state explorer Oil India Ltd today approved an initial public offering (IPO) of the company in first quarter of 2008.
"In the 69th Extraordinary General Body meeting of OIL, the shareholders of OIL approved further issue of share capital. The resolution was passed unanimously," a company press release said here.
The OIL IPO is slated to hit the market in the first quarter of 2008. OIL plans to issue 2.64 crore shares of par value of Rs 10 each to the public. Out of this, 24.04 lakh shares will be given to its employees.
Currently, the government has 98.17 per cent stake in the company, while the remaining stake is with employees. After the IPO, government's stake will come down to 78.43 per cent. The government is divesting 10 per cent of its equity to the general public. Besides, a similar quantum is being sold to Indian Oil, Bharat Petroleum and Hindustan Petroleum. The remaining stake will remain with the employees.
OIL currently produces around 3.30 million tons of crude annually, around 7 million standard cubic meters per day of natural gas and more than 45,000 tonnes of LPG annually. Most of these come from its traditionally rich oil and gas fields concentrated in the northeastern region.
The search for newer avenues has seen OIL spreading out its operations in onshore/offshore Orissa and Andaman, deserts of Rajasthan, plains of Uttar Pradesh, riverbeds of Brahmaputra, Krishna-Godavari Basin and offshore of Saurashtra.
MUMBAI: If the prophets of doom were to be believed, the SEBI clampdown on participatory notes was expected to impact demand for initial public offers (IPOs). But the prevailing rates of upcoming IPOs in the grey market give no such indication.
According to brokers active in the grey market, most issues that are open for subscription or are scheduled for listing in the coming weeks, are trading at a premium as high as 100% to the issue price. IPO premiums have been steadily rising even when the regulator was in the process of finalising PN guidelines.
Merchant banking circles say that a significant portion of FII subscription in IPOs have been coming in through the PN route. “The trend shows around 25% of FII demand for IPOs is met through P-notes, which is expected to come down after the Sebi move. While this will largely impact small issues, companies with good business model and bright prospects would not see much of an impact,” said a merchant banker.
Tighter PN regulations could affect short-term fund flows into both the primary and secondary markets, feel market observers. However, there is near unanimity in market circles that the flows will pick up over the next few months if the growth in the economy as well as corporate earnings sustain.
Issues like Mudra Port and SEZ, Religare Enterprises, Allied Computers and Varun Industries are trading at a huge premium to their offer price, including the much talked about Reliance Power IPO, according to grey market sources. The coming months may witness a slew of IPOs by infrastructure, energy and power companies.
Grey market participants are expected to take cue from the outcome of the Fed meeting and it would have significant impact on the premium of these IPOs. Sources say there has been some decrease in the premium of Barak Valley Cement and Religare Enterprise in the last session.
For example, in the case of Barak Valley Cement, premium has gone down from Rs 24 to Rs 18-20 in just one day. Also in the case of Religare Enterprise, it has gone down from over Rs 300 to Rs 260-280 range. Though they maintain that the positive news from the US could further fuel positive sentiments in the primary market and premiums may rise substantially.
In a volatile or a weak market, grey-market premium shrinks and many a time the issue becomes unattractive for subscription. In such a situation, the pricing is usually conservative so that there is some scope for investors to make gains on listing. The issuers and lead managers of the forthcoming IPOs are expected to have adopted this strategy as P-note issues could have dented their prospects severely, say bankers.
Investors are understood to have been offered higher rates for lending their applications in many of the latest issues. A retail investor can apply for a maximum of Rs 1 lakh worth of shares. So, he is usually paid Rs 2,500 to Rs 3,000 in cash for his application.
This amount has gone up to Rs 5,000 to 6,000 per application in some cases due to high grey-market premiums. Often, the application money of Rs 1 lakh is provided by financiers who are part of the grey market network. The applicant investors are only bothered with the cash they get per application, in fact, they have no control once the shares enter their demat accounts.
If there are three or four eligible applicants in a household, it means an income of Rs 15,000 to 20,000 for the family just renting out the demat and bank accounts. Such income can rise further when the primary market is quite bullish. As part of grey market operations, an IPO applicant hands over the delivery instruction slip book of the demat account signed by him/her to the agent broker. Once the allotment is made, the broker gets the shares transferred to his account, say market sources.
Mumbai: Edelweiss Capital Ltd, a diversified financial services company, is foraying into the capital market with an IPO of 83,86,147 equity shares of Rs 5 each. The company plans to raise a total of Rs 690 crore.
The shares are proposed to be listed on both the BSE and the NSE. The price will be decided through 100 per cent book-building process. The price band for the issue is fixed between Rs 725 and Rs 825. Issue will open on November 15 and will close on November 20.
The earnings from the issue will be used for the enhancement of margin maintenance with stock exchanges by their subsidiary, ESL, establishment of additional offices and acquisition of infrastructure, development of existing technological capacity, prepayment of loans and for general corporate purposes.
Qualified institutional buyers will be allotted 60 per cent of the issue, 10 per cent to non-institutional investors and the remaining 30 per cent will be allocated to retail investors.
The book running lead managers for the Issue are Kotak Mahindra Capital Company Ltd, Citigroup Global Markets India Pvt Ltd, and Lehman Brothers securities Pvt Ltd.
