Indian investors for many months have been grabbing every IPO that has come out but as of late – that ain’t the case. I wouldn’t call myself a doomsday guy, but having been in the thick of the “internet revolution” of 1999-2000, history does repeat itself. There have been a few IPO’s I have been tracking and true to form most are dogs. I like to call these three the past, present and future:
Past – Parsvnath Developers, came out two weeks ago and no where near it’s initial price
Present – Cairn India, hit the street on Tuesday – Jan 9 and of course lagging. In fact, the issue was not oversubscribed as first reported and the 3 banks that were leading the road show had to chip in money
Future – Shoba Developers, waiting for the carnage to begin
My favorite (in a sarcastic tone) is Cairn India, they claim to be a part of the Scottish company Cairn Energy PLC. But after reading through the Red Herring document it seems they just put together some wild assumptions about some oil exploration, threw together a management team and honestly couldn’t even copy their parent company’s logo correctly. As of today it was the largest IPO in India, so they did manage to get a lot of money in the door. But my guess is that a large part was due to the marketing of Cairn. A month prior to the book building process (a way to determine the final price and volume), you couldn’t look at a billboard or a TV show without seeing their advertisement’s. They did a great job of also planting rosy stories in the newspapers like they were on the verge of discovering massive amounts of oil, but of course their Red Herring document spoke the truth – discoveries were still many years off if ANY.