IPOs have been in the news for a while. With the India government considering dis-investments, market seems to have been flooded with IPOs.
We recently had the Government company National Hydro-electric Power Corporation (NHPC) listing its shares with a lot of fanfare.
There was drama when the CMD of that company and the owners of the two Merchant Banks Enam ( Vallabh Bansali ) and Kotak Securities ( Uday Kotak) rang the Bell and the stock started trading.
And then we saw a lot of grim faces as the issue had one of the flattest of openings and finally the share ended just a bit above the issue price.
This brings us to think, focus why Merchant Bankers again and again bring out issues at prices which are so investor unfriendly.
It’s true that they get paid by the Issuer and not by the investor, and so they are loyal to those who pay them.
But, as market intermediaries, isn’t it also important for them to keep the interests of the market at large and small investors also in mind?
I wonder if the memory is so short that we/they tend to forget the disastrous effect the over pricing of Reliance Power in Jan 08 had on the whole market?
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