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India ECM charity run continues

shanks — Tue, 09 Mar 2010 08:14:36 +0000

The six banks – Citi, Edelweiss Capital, Kotak, Morgan Stanley, RBS, UBS - bookrunning NMDC’s up to US$3bn follow-on are basically doing charity work. They are getting paid a total 0.01% of the deal as fees which is abysmally low (even lower than the 0.08% and 0.10% paid for two other Indian divestment deals done earlier in the year). The banks are making nothing and in fact spending a lot from their own pockets because they will be paying for travel expenses, roadshows and other costs and all this charity work is for league table positions. After all this is it still a wonder why banks find themselves in a liquidity crisis?

REC FPO subscribed

shanks — Tue, 23 Feb 2010 05:12:45 +0000

The Rs34bn (US$754m) follow-on offering from state-run power firm Rural Electrification Corporation’s (REC) which was struggling till yesterday has suddenly got huge interest from foreign institutional investors and state firms on the last day of subscription, said bankers close to the deal. The 171.7m share offer stands oversubscribed and bankers said they expect the book to be covered about 2 times at the end of the day. The floor price on the offer is Rs203 and the stock is now trading around Rs212. Retail investor response has remained very poor but institutional demand is strong. The deal is being offered to institutional investors via a newly devised French auction system. Bank of America Merrill Lynch, ICICI, JM Financial, Kotak Mahindra and RBS are managing the REC offer.

Charitable banks in India

shanks — Fri, 19 Feb 2010 08:20:01 +0000

Banks with lead roles in the recent government disinvestments are more charitable than you would think. Rural Electrification Corp is rumoured to be paying about 0.1% in fees for its up to Rs34bn (US$754m) follow-on offering. So rough back-of-the-pad calculations is that the five books – Bank of America Merrill Lynch, ICICI, JM Financial, Kotak Mahindra and RBS – are making a total Rs34m in fees or about Rs6.8m each or US$146,000 each. The last Indian government divestment done in NTPC saw the leads – Citi, JP Morgan, Kotak and ICICI Securities – getting paid 0.075–0.08% or about US$400,000 each. Great charity work indeed by the banks all for the name in the league table and profile. “Banks are just being responsible corporate citizens who are working for the well-being of the people by doing government deals for free,” said one banker tongue-in-cheek.

India changes divestment auction rules

shanks — Fri, 19 Feb 2010 06:09:11 +0000

The Indian government is showing how serious it is about raising funds by divesting stakes in state-run companies. The institutional bidding process under a newly devised French auction method for state-run power firm Rural Electrification Corporation’s (REC) up to Rs34bn (US$754m) follow-on offering is being changed. Indian government officials are also rumoured to be keen to completely scrap selling shares via the newly devised French auction in state-run miner NMDC in March leaning instead towards a traditional bookbuilding process.

The government has decided to fix a floor price of Rs203 or a 8% discount to the February 17 close for the REC follow-on. The deal opens on Friday and closes on February 23. It is set to allow institutions to revise their bidding price downwards as well as upwards which is different to the NTPC offer where the price could only be revised up. Bank of America Merrill Lynch, ICICI, JM Financial, Kotak Mahindra and RBS are managing the REC offer.

The government will be selling 332m shares or a 8.38% stake in NMDC to the public in a followon to raise up to Rs180bn. The pricing band is expected to be decided by the second week of March. Some bankers are also expecting the government to be a bit more generous with the pricing and price shares at a 30%–40% discount to the secondary trading price (last traded at Rs461.90). Citi, Edelweiss, Kotak, Morgan Stanley, RBS and UBS are the bookrunners.

Small block sale in India

shanks — Fri, 05 Feb 2010 09:57:32 +0000

Dubai World unit Istithmar World sold a 13.8% stake in budget airline SpiceJet via an overnight block sale, via Bank of America Merrill Lynch. The block trade was sold at Rs52.01 or a 4.9% discount to the Rs54.70 close on Thursday.

So far so good for NTPC follow-on

shanks — Thu, 04 Feb 2010 03:04:57 +0000

The institutional book of NTPC’s up to US$2bn follow-on is fully subscribed on day one of opening. The overall issue is covered up to 0.64 times. The offer opened on Tuesday and closes on February 5. The state-run power firm is offering 412.3m shares of which 4.3m are reserved for employees, 204m for institutions, 61.2m for non-institutions and 142.8m for retail investors. The floor price is Rs201 which is the price for retail investors but institutions need to bid under an auction method. The investor bidding the highest price above the floor price will get his desired amount of shares and whatever shares are left will be given to meet the demand of the second highest bidder and so on. Today, bids for about 208m shares were received at a price of Rs209. The leads for the deal are Citi, JP Morgan, Kotak and ICICI Securities and they are rumoured to be paid fees of about 0.075–0.08%. Yes it is not zero as everyone believed but even the levels being rumoured are not that much.

Wockhardt battle continues

shanks — Wed, 03 Feb 2010 04:26:08 +0000

Holders of Wockhardt’s defaulted US$110m zero coupon CBs due 2009 have proposed they will accept new five-year CBs in return for their 2009 bonds. They have proposed the new bonds mandatorily convert into the company shares at maturity and be issued in a ratio of 1.295 new bonds for every one defaulted bond. The conversion price of the new bonds is proposed to be at a 10% premium to reference price of Rs182.5, the closing price of the shares on October 25 2009 and they should pay a 5% coupon semi-annually. The bondholders have filed a winding-up petition against the company. The company has held back asset sales till the petitions are resolved in the court.

This is a long-drawn battle between bondholders and an Indian company. Essentially, the bondholders want the company’s shares but the company does not want dilution. One bondholder said the dilution they expect is only 10% and the company’s founders would still hold 62% so “what is the problem in that?” At the moment, it looks like this situation will not get resolved very soon but there is indeed lot of pressure being put on the company to accede to the bondholders’ demands.

Financial astrology or technical analysis

matthewdavies — Mon, 01 Feb 2010 12:13:18 +0000

We received this email today. 85%? He must be rolling in it.

I AM A FINANCIAL ASTROLOGER & SUCCESSFULLY PREDICTING THE MOLVEMENT
OF INDIAN STOCK MARKET IN GENERAL & SPECIFIC SECTORS IN PARTICULAR WITH SUCCESS RATE OF ABOUT 85%.

MY PREDICTIONS ARE PUBLISHED DAILY IN MONEYCONTROL.COM (India’s no.1
financial portal & venture of CNBC)& IN REDIFF.COM (india’s no. 1 portal)

I HAVE BEEN CAREFULLY WATCHING THE STOCK MOVEMENT OF HONG KONG STOCK
EXCHANGE & CAN PREDICT ABOUT IT ALSO.

I SHALL BE OBLIGED, IF YOU HELP ME IN THIS MATTER..

WITH KIND REGARDS

SATISH GUPTA
WEBSITE: WWW.ASTROSTOCKTIPS.IN

Complete cobblers, of course. But no more so than the technical analysis that some of you rely on.

And what’s with the shouting, Mr Gupta?

NTPC floor price being determined

shanks — Mon, 01 Feb 2010 11:51:41 +0000

Indian government officials are meeting later tonight to fix the floor price for state-run power firm National Thermal Power Corp’s up to US$2bn follow-on offering which opens on February 3 and closes February 5. The leads for the deal are Citi, JP Morgan, Kotak and ICICI Securities. The Indian government will be looking to sell 5% of its 89.5% stake in NTPC. The follow-on offering will come via an auction method which means that a floor price would be announced by February 2 and investors will need to bid the price and the amount they would like to buy. The investor bidding the highest price above the floor price will get his desired amount of shares and whatever shares are left will be given to meet the demand of the second highest bidder and so on. Given the weakness in secondary markets, bankers are expecting the floor price to be at a 5% discount to today’s closing price (currently at Rs211.25).