IPO's [Updated Daily]

[love_gundu22]

FIs, retail buyers bail out Cairn

Cairn India’s initial public offering (IPO) got a weak response from investors and just managed to get subscribed, thanks to last-minute intervention from institutional investors and retail buyers.

Cairn barely managed to scrape through with a subscription of 1.11 times, according to data on the NSE website till late evening.

Investment banking circles blamed it on recent stock market volatility, unresolved issues over the evacuation of crude oil from Rajasthan fields, and aggressive pricing of the issue as the main factors for the lukewarm response.

Many qualified institutional buyers are reported to have scaled down their bid size as well as revised their bid price to the lower end of the Rs 160-190 price band on the last day. The scaling down of bids is evident from the fact that the 32.88-crore share issue had been subscribed 1.3 times on the day it opened for subscription.

With some investors scaling down the size of their bids, the extent of subscription came very close to the critical90% mark during the early part of the day. However, the number graduallyincreased as retail applications trickledin and the issue was able to close successfully. Market watchers are intrigued by the apathy to the Cairn IPO, given the positive outlook on the energy sector, the strong pedigree, and the fact that India is now a key destination for most foreign institutional investors.

“A two-day volatility should not really unnerve institutional investors, who are long-term players,” said an investment banker who was not part of the IPO. Prices of crude oil have stabilised around $60 per barrel of late, nearly 25% off their record highs seen earlier this year, but still significantly higher than the levels a couple of years ago.

Another IPO which opened for subscription on Monday, Tanla Solutions, and which closed on Thursday, was subscribed 38 times. The issue managed to generate bids worth Rs 7,000 crore plus – more than what Cairn had been able to do by Friday evening.

A strong oversubscription denotes big demand for the stock – critical for the price to appreciate and sustain after listing. Market sources said a weak demand at the time of subscription indicates that the stock could come under pressure during listing.

A banker associated with the issue said if the issue price is below Rs 176.48 – the price at which Cairn had conducted a pre-IPO placement – Cairn India will have to reduce the price for the investors, as per the agreement between Cairn and the investors. Among the biggest investors was Malaysian oil major Petronas, which had picked up 10% at Rs 3,700 crore.

Another reason for the weak response is the unresolved issue of the offtake of Rajasthan crude. Cairn India and the buyer Mangalore Refineries (MRPL) have not agreed on the price for the crude or the mode of evacuation. Cairn had said it may help fund the laying of the pipeline to evacuate the crude. It is not clear whether the link will be built by the time production starts in 2009. The 310-mile pipeline linking the fields in Rajasthan to a port in Gujarat is estimated to cost about Rs 2,000 crore.

[nbmehta19]

Spice Communications: Avoid

Investors can refrain from subscribing to the IPO of Spice Communications being made in the price band of Rs 41-46. The company is a pure-play mobile services provider in Punjab and Karnataka, with a combined subscriber base of about three million. Faced with high debt and vendor dues, Spice hopes to raise funds for the twin purposes of part-repayment of debt and future expansion. Though the asking price values Spice at a discount to competitors, such as Bharti and Idea, the company's track record, cost-structure and trends in business growth in recent years suggest that it may not be well-placed to capitalise on the growth opportunities in mobile services, amidst intensifying competition.

Of the IPO proceeds of about Rs 520 crore (at the higher end) and the pre-IPO placement of Rs 112 crore, half is to go towards part-repayment of debt (which stands at about Rs 1,200 crore), and the rest to pay licence fees for starting NLD (national long-distance) and ILD (international long distance) services and repayment of vendor dues (Rs 63.6 crore and Rs 177.6 crore respectively).

Business overview

Spice has been in operation for over 10 years now (inception 1997) and is yet to turn PAT (profit after tax)-positive. The balance-sheet shows accumulated losses of over Rs 684 crore as of December 2006. Other regional players such as Aircel and Idea fare better on the above parameters. Aircel, Bharti Airtel, and Idea, which also commenced mobile services in 1997-98, turned profitable within six-seven years and acquired a national footprint.

Spice appears to have lagged its peers in optimising its network operating costs, possibly signalling that it may not be getting the best deals from its network equipment vendors. At 40 per cent of revenues, the proportion of network operating cost for Spice is a clear 15-20 percentage points higher than that for Idea and Bharti. An increasing trend in these costs over the last three years is also of concern, for future profitability.

Second, trends in Spice's subscriber additions over the last year do not compare favourably to competition. It has only managed to add about 82,000 subscribers a month in Punjab and Karnataka, while Airtel has managed to add nearly 2.5 lakh subscribers per month. BSNL and Hutch have added more than a lakh subscribers a month over the past year in these two circles. Spice ranks fifth among the six mobile service operators in Karnataka, but is better-placed in Punjab, where it is second in terms of subscriber numbers. Aircel, which added 1.5 lakh subscribers a month in the last year, despite being a regional player, has managed to retain its leadership position in terms of subscriber base in both the Chennai and Tamil Nadu Circles. For Spice, the modest subscriber additions and a rapidly-falling ARPU (average revenue per user) over the last couple of years are threats to revenue growth.

Third, a substantial portion of this IPO is to go towards part-debt repayment, vendor payment and licence fees to commence NLD and ILD services. Though this would reduce interest costs, the company may be left with little to be deployed in a national rollout of mobile services. In any case, with only part repayment of debt, interest costs will remain at relatively high levels.

final view
" The company's track record, cost structure and trends in business growth suggest that it may find it difficult to capitalise on growth opportunities amidst competition."

[jainbhaveshdilip]

thanx sagar for tht important link

[nirmit]

Lotus India Growth Fund
By Research Desk | Jun 29, 2007


Lotus India Mutual Fund comes out with its new equity diversified fund after a gap of 3 months.

Name of fund: Lotus India Growth Fund

Scheme: Open-ended, Equity Diversified

Objective: Generate long-term capital growth by investing in equity and equity related securities following a bottom-up approach.

Asset allocation: Equity: 65% - 100% / Debt and money market securities: 0%-35%

Fund opened: July 9, 2007

Fund closes: July 19, 2007

Face Value: Rs 10

Minimum investment amount: Rs 5,000

Fund Manager: Tridib Pathak

Benchmark Index: BSE 100 Index

[adityam12345]

data related to the IPO scam


IPO SCAM (2005):
The IPO Scam was unearthed in June 2005 when SEBI through its examination of the IPO dealings of Yes Bank and IDFC revealed that certain entities had cornered IPO shares reserved for retail investors by applying in small quantities through thousands of `benami' or fictitious names.
After allotment, these shares were transferred through a series of off-market transactions to financiers, who, in turn, sold most of these shares on the day of listing and made a windfall gain of the price difference between the IPO price and the listing price, the SEBI investigation shows. The following is the list of individuals and their brokers and bankers who were caught in the Scam:
Individual No. of suspected benami Demat A/Cs Depository Participant Bank
Roopalben Panchal 27,064 Karvy Stockbroking Bharat Overseas Bank
Purshottam Budhwani 8,476 Karvy/Pratik/Anagram/ING Vysya/HDFC HDFC & ING Vysya Bank
Sugandh Estate 10,181 Karvy Stockbroking Vijaya Bank
Manojdev Seksaria 2,205 KArvy Stockbroking Not Known
The above individuals were charged with making multiple applications in IPOs and garnering the share of retail investors. They were suspected to be involved in the IPOs of 21 companies. Some of them are YES Bank, IDFC, Gateway Distriparks, Gokaldas Exports, Shoppers’ Stop, SPL Industries, Provogue India, Nector Lifesciences, IL&FS Investmart, Suzlon Energy.
The involvement of Stockbrokers and Banks in the Scam was also scrutinized by SEBI as it was not possible to open such a large number of fictitious accounts without their involvement.
In the wake of the IPO Scam, SEBI took measures to curb any such happenings in future. Due to the gross violation of Know Your Customer (KYC) Norms on the part of the stockbrokers, SEBI barred those involved from further carrying operations. A few orders of SEBI were however overturned when the parties applied to the Securities Appellate Tribunal. To prevent multiple applications, SEBI also made it mandatory for all applicants to disclose the PAN (Permanent Account Number) issued by the Income Tax Department in the application forms