document.writeln("

IPO 'over subscription': Separate books likely for institutional and retail buyers
New Delhi: Among the many measures being contemplated to improve the current structure of book-built offers, the Ministry of Finance and the SEBI are considering a proposal to have separate books for qualified institutional buyers (QIBs) on one hand and non-institutional investors (NIIs) and retail individual investors (RIIs) on the other.

The measures being contemplated include replacing the discretionary quota system for allotment to QIBs with proportionate allotment and seeking payment of margin by institutional buyers.

However, details of the proposal are not available.

QIBs, NIIs and RIIs are currently part of a single book-building process, which has given rise to the trend of the announcement of instant 'oversubscription' for an IPO through heavy bidding on the part of QIBs. With the QIBs currently not required to sign a cheque to back up their bids, unlike NIIs and RIIs, the 'oversubscription' figures can be fairly misleading, giving a misleading impression to retail investors luring them towards the issue.

For ferar of missing out on the issue most retail bids are almost always made at the "cut-off" price in fear of missing out on allotment. This is believed to distort the price discovery mechanism with virtually all issues now being eventually priced at the highest end of the price band.

QIBs are institutional investors with enormous financial muscle and capital market expertise such as public financial institutions, commercial banks, mutual funds, FIIs, venture capital funds, pension funds, and insurance companies.
Back to News Review index page  

JP Morgan may clinch A-I's IPO deal
Mumbai: According to A-I sources, JP Morgan may have emerged as a front-runner to advise Air-India (A-I) on its initial public offering (IPO).

Sources say that the management committee has short listed two firms, including DSP Merrill Lynch, from the six investment bankers that made a presentation last month for drawing up a roadmap for the state-owned carrier's planned public offering.

Among the companies to have made presentations were, SBI Caps, DSP Merrill Lynch and HSBC Securities.

Debt-equity norms of 2:1 make it ideal for A-I to raise Rs10,000 crore through the flotation. The ratio is a benchmark in the capital-intensive industry, sources said.

The airline has a share capital of Rs153.84 crore, which is fully subscribed by the central government, and an authorised capital of Rs500 crore. It has a turnover of $1.5 billion (Rs6,500 crore) and assets of Rs7,000 crore.
Back to News Review index page