Readings: Reliance Power 3:5 bonus, PE losses, Sugar rebound
Reliance Power Ltd., the company that raised $3 billion last month in India’s biggest initial public offering, will issue free shares to compensate investors for the slump in the stock price after listing. The Mumbai-based company will issue 3 shares for every 5 . . .
The bonus issue will reduce the cost of acquiring Reliance Power shares to 269 rupees for individual investors, 40% lower than the IPO price.
‘Seven Mauritius-based investors went on selling within four minutes of the listing even when the market was falling,’
- Economic Times: Value of investments takes a tumble in stock mkt reversals
Virtually every big PE from Citigroup, Temasek, 3i, UTI Venture Funds, CLSA and Warburg Pincus to JP Morgan have been left licking their wounds in the wake of the sudden market reversal. The situation is so bad that the value of investment in some deals of 2008 is down by 21%.
The average loss on investment for all private equity deals done in 2007 is 30%. And if you think that is bad, then private equity investors who did deals in 2006 stand to lose two-fifth of their investment at 43%.
All valuation tools have been savaged at the altar of market volatility.
Love that last line! But where were these valuation tools on the way up to 21k?
Comparatively cheap sugar may have been a late-starter in the global commodities boom, which started at the beginning of 2007, but it has been among the strongest of commodities in 2008, outpaced only by soaring platinum.
May white sugar futures on the IntercontinentalExchange rose to an 18-month peak of 14 cents (about Rs5.60) a pound on Thursday, up 30% this year and more than 40% since December.
“A lot of the funds’ analysis suggests that this thing called ag-flation is here for a while.”
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