IPOs in India: Growth, Grading & Greed
First the good news - for investment banks & IPO underwriters, I mean 
The total amount likely to be raised in FY08 is Rs 60,000-75,000 crore, based on available information. This is thrice the amount raised in FY07.
Around Rs 6,000 crore is expected to be raised via six issues in the real estate sector, excluding that of DLF, whose issue size is pegged at around Rs 13,000 crore.
The total amount translates to $15 - $20B - put that in the context of FII inflows - $8B in calendar 2006 and $6B year-to-date. Unless a lot of new money enters the market to meet these IPO needs, investors will have to sell existing holdings - which implies downward pressure on stock prices. Of course, the IPO underwriters will laugh all the way to the bank!
Then again, the Securities Exchange Board of India (SEBI) has made life a bit more difficult for new IPOs: Is compulsory grading of IPOs a good idea?.
Rajeev Dalal: Though there has been criticism initially from the intermediaries involved in the IPOs, it is a matter of time before the merchant bankers, brokers and investment advisors derive the benefits of grading.
Prithvi Haldea: But are investor associations even aware of the pitfalls of IPO grading, and that what will be delivered is a subjective opinion, and that too incomplete. In spite of disclaimers and education, most small investors will only look at the grade digit; history tells us so.
Regardless of its merits, IPO grading will add some burden to the issuers’ fund raising activities. For example, the DLF IPO took a year to get approved.
The worst part is - inspite of all this, we will continue to see greedy IPO scamsters come up with ever novel ways of making money: IPO applications with photos from matrimonial site.
In orders issued against two people of the Jhaveri Group, SEBI has said that 10 photographs used for IPO applications carried photographs from the matrimonial site, Shaadi.com.
The font and style of the impression as contained in the photographs attached to the letter and as appearing on the website of Shaadi.com appear to be the same.
What next?
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