The games never end on small cap IPOs and this is not different. This could be called a mockery of public issue as only 19 shareholders were allotted 75% of the total equity size of Alkali Metals, and only 1 among them was allotted 35% of the total equity size. Closer look at the allotment details will reveal that Mavi Investment Fund was the only QIB applied for the issue and was allotted 35% of the issue. Important to mention that there is no lock-in period for Mavi Investment, Investors should remember that Mavi Investment has been active in small-cap IPOs in the past as well.
It was not a smooth sailing for Alkali Metal to gets its IPO through as the co has to extend dates and lower price band. Also, ICRA rated IPO grade 2 which suggest below average fundamentals. All these leaves bad taste in the mouth for most of the investors. Retail investors should remain away from these kind of IPOs as the gains could fizzle out with the blink of an eyes as seen in the past.
19 shareholders hold 75% of total equity issue
Mavi Investment: 9.12 lakh shares
Bodies Corporate: 10 hold 6.8 lakh shares
Individual shareholders holding shares capital excess of Rs 1 lakh shares: 8 hold 2.8 lakh shares
About Alkali Metals issue and allotment
Issue size: 25.5 lakh shares
Issue received 1,315 applications resulting in 1.02 times subscription
1 application was allotted 35% of total equity issue (hold 9% stake)
Mavi Investment Fund was allotted 35% of total equity issue
Mavi Investment Fund shares are not locked in
Mavi Investment Fund is a sub-account of M.M. Warburg Bank (SCHWEIZ) AG and has been active in small-cap IPOs
MM Warburg & CO KGaA is the 2nd largest independent private bank in Germany. The equity capital of the bank is entirely owned by private individuals.
Subscription
QIB: 1 application, subscribed 0.72 times
Non Institutional Investors: 57 applications, subscribed 3 times
Retail: 1257 applications, subscribed 0.55 times
No application from MFs
Other details of IPO
Company extended last date of issue by 5 days and reduced price band from Rs 90-105 to Rs 86-103
ICRA had assigned IPO grade 2 indicating below average fundamentals
Raised Rs 26.26 crore
By: By Varinder Bansal, CNBC-TV18
Thursday, November 6, 2008
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