Reliance Power’s Rs 11,000-crore initial public offering was a blockbuster in the primary market driven by investor euphoria. The issue had received bids in excess of Rs 7 lakh crore when it had opened for subscription in January 2008, however, its investors were given a rude awakening as billions of dollars were obliterated on the day of its listing.
For many who watched
’s debut that day and saw the stock sink 14 per cent at the end of the day from the IPO price, it was the beginning of the end of the “Golden era” as six months later the world would be plunged into its worst-ever post-World War recession.
Paytm, the largest ever IPO to grace the Indian primary market, may not have seen the euphoric subscription numbers that Reliance Power had seen but the hype around the company was as real as it gets. Retail investors have seen more than Rs 30,000 crore of the company’s market cap obliterate as the stock ended 27 per cent lower from the issue price.
Whether Paytm’s IPO will become a harbinger of bad times like RPower remains to be seen, but it sure should deflate the bubble in India’s IPO market till LIC comes knocking next March.
gets a call from Kubota
Investors of Escorts have been waiting for this for a long time. Earlier this year, rumours had started to do the rounds that the Japanese tractor maker could buy a further stake in one of India’s largest tractor makers.
Earlier today, Escorts said that it has reached a deal with Kubota under which the Japanese company will invest Rs 9,400 crore to buy a controlling stake in the company. Kubota will buy some stake via a preferential allotment at Rs 2,000 apiece, a premium of 23 per cent to Wednesday’s closing price.
Additionally, the Japanese company will make an open offer at Rs 2,000 to public shareholders to acquire another 26 per cent stake in the company. At least some investors went laughing home this weekend!
can’t get anything right
After the doomed delisting offer by Vedanta’s promoter, Anil Agrawal has come back to investors with a new offer – a demerger of various businesses to “unlock value”. Investors’ reaction to the billionaire industrialist’s offer? A 9 per cent beating of Vedanta’s stock.
Analysts and investors alike were not impressed by the company’s decision as it once again leaves the most important issue unaddressed – promoter leverage. Vedanta’s promoter has continuously taken loans from the company to finance his own ventures abroad leaving the minority shareholders to do the heavy lifting.
While a demerger of various businesses could open up some value, it will not reduce the suspicions around lax corporate governance standards at the company.
