First Religare, and then Mundra closed at about 115x over-subscribed. Both the QIB and HNI were about 150x to 160x oversubscribed. S Subramanian, Head of Investment Banking, Enam Financial Consultants who was the investment banker for both these issues to share what went right with these two issues.
Excerpts from CNBC-TV18’s exclusive interview with S Subramanian:
Q: Where did you see the maximum demand coming in from the QIB and HNI side- if you cannot share names probably geographically?
A: The geographical distributions of the QIB names were so interesting that it’s been equal. We have seen a significant demand come from India. We have seen significant demand also come in from across the three continents, US, Europe and Asia and therefore it is not as if we saw any special or spectacular effort coming in from the US or from Asia or one of the three regions we saw come through. But what's also interesting is that even in India, demand was very strong.
Q: We have heard market buzz last time around that there have been a decent number of Indian pension or provident funds that are also putting money. Did you see that trend continuing?
A: I don’t have exact individual names with me. But the last time we saw that, was in Power Grid offering and I am sure that it would have been here. Unfortunately I don’t have those names right in front of me.
Q: Did this P-note issue have any impact on the kind of investors that actually came in on the quantum that you would have actually expected and did that in any way you think take a backseat?
A: I don’t know whether the people who use normally the P-notes have been able to come in. But we also expected that many of the P-notes instead of the underlying clients could also have been used by the proprietary funds and until recently, they had to give way for the clients. That could have been one reason. But we have also seen a significant number of newer names into the book; so that itself is a good indicator that Mr. Damodaran’s efforts are bearing fruit or will bear fruit.
Q: Can you therefore say with confidence that the primary market will hereafter not be really impacted by the P-note constraints at all?
A: I would not want to say that there is no impact at all. Mundra was a unique case; a case where complete scarcity premium - there is no port in the market in the listed place, there is no port-cum-SEZ in the market-listed place. The valuation was attractive. We have seen people come in at similar valuation. But with a one-year lockup and here is an offer, which is there for people without any lockup. So we think that significant portion of the demand also could have been simply the fundamental reason. So let’s not just move only into the technical part of the whole reason as to why people come in. But there is a fundamental reason why people came into the offering and credit should go more towards that.
Q: What are you factoring in terms of a growth rate when you actually sold this issue because the SEZ comes up only in 2010 and even the Petronet aspect that you are talking about is 50-50 JV. While the point is taken that it is very niche space, but what sort off growth rate did you sell to your investors that this company could essentially grow at that they have bought into these valuations?
A: Effectively, we told our investors this is a sum of parts valuations, this is not only a growth rate. There is growth rate in the port business. There is an SEZ business that is there and these are the way we put together. So it was not a one single story with a growth in it. SEZ business was on a DCF face valuation and the port was on its own valuations. We sold it as a sum of parts valuations.
Q: And your sum of parts comes upto Rs 450 per share?
A: We believe that at sum of parts at the Rs 440 per share, we expected in the Rs 400-440 per share. Investors should in the medium term make money and that was what our recommendation of the price band was, which the company had accepted.
Courtesy: moneycontrol.com
Sunday, November 11, 2007
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