Blackrock Absolute Return Strategies IPO Review (Fund of Funds)

As introduced in this article, there are several fund of funds existing in the market. The most recent one that will be added to the list is an offer from BlackRock Inc., which is all set to come out with an IPO for its fund of funds in the name of Absolute Return Strategies IPO.

BlackRock Inc. has recently launched the IPO for a targeted price of $500 million fund of funds which is expected to be traded on LSE or the London Stock Exchange. The interesting part of this fund of funds is that it will aim to give better returns – a whopping 6% returns over the 3 month LIBOR or London Interbank offer rate on an annual basis. Hence, if the 3 month LIBOR rate is at 3%, then the Blackrock Absolute Return Strategies will be expected to generate a 9% returns for that year.

As per the news published in the Wall Street Journal, Absolute Return Strategies will provide investors access to its $11 billion Appreciation Strategy of investing in pools of hedge funds, which it acquired last year as part of its purchase of Quellos Group LLC.

Though there are certain limitations for the applicants, as not everyone from the USA will be allowed to invest in the Blackrock Absolute Return Strategies fund of funds. However, there are about 30 different funds listed in the London Stock Exchange which do not have any such restrictions when it comes to applicants. The Absolute Return Strategies fund would be among the largest listed.

BlackRock currently manages about $1.3 trillion across their equity, fixed income, cash management, alternative investment and real estate strategies. Table of Contents

An introduction to Fund of Funds

Ever heard of a fund which is a constituted by other funds?
Well, that’s what is called the fund of funds. In this article, I will aim to provide a tutorial about fund of funds. This will help you understand how fund of funds work and what are the risks associated with investing in fund of funds.

Fund of Funds works like as follows:
A simple mutual fund consists of stocks – which can be as low as 10 stocks or as high as 200 stocks. On the other hand, a Fund of Funds consists of different funds. Hence, as a mutual fund invests in stocks, a fund of fund invests in other funds. It’s a very common concept in the western countries to have fund of funds as investment vehicle. However, no returns are guaranteed.

Say, for example, I am running a fund of funds and I invest in 10 different funds. Ultimately, these 10 different funds will invest in stocks. Hence, there is a major chance that fund 1 and fund 2 are holding the same stocks. Hence I end up paying more fund management charges, entry, exit loads and commissions for ultimately holding the same stocks.

One good option to get rid of the problem is to diversify. Say I may be investing in a fund that holds only Oil stocks. And second fund that I can choose that invests only in metal stocks. But the problem is again of the charges that I pay for holding so many funds.

Another problem is that most of the funds are not sector specific. They may keep switching their holdings as per the will and wish of the fund manager. Hence, I may not be able to track when the two funds have overlapping stock holdings.

Anyways, it’s a good option for investment if you can find specific and strictly sector specific funds, like the Oil company funds. In the developed countries of the west, we can find a lot of such funds. These funds are quite common among investors.
Unfortunately, in India, we do not see any such fund of funds. However, it is easy to create these fund of funds on your own. Simply buy the sector specific funds you like and you will have a fund of funds of your choice. But be careful, about the precise diversification and sector specific funds. Table of Contents

American Water Works IPO Review

Another proposed IPO is in the making. This time it belongs the basic necessities of life.
The American Water Works which is making business out of the wastewater and water utilities is planning to come out with its Initial public offering or IPO. The company has filed the IPO proposal document to SEC on Monday the 31st March 2008.

Size of American Water Works IPO: 64 million shares

Price Band of American Water Works IPO: $24 to $26 a share

A wholly owned subsidiary of RWE which is a European electricity and gas company, American Water works is operating primarily in the USA. The RWE is planning to sell American Water in more than one offering through its subsidiary Thames Water Aqua Holdings GmbH.
Even after the sale of shares through the IPO, RWE will remain the majority shareholder as it will continue to own about 60 percent of the American Water's common stock.
Thames Water Aqua Holdings is selling all of the shares in the IPO. American Water will not receive any of the proceeds from the offering.
As per the news, American Water expects to have 160 million shares outstanding after the IPO for a potential market capitalization of between $3.8 billion and $4.2 billion.
American Water is in the business of regulated water and wastewater utilities which serve all kinds of clients - residential, commercial and industrial customers, while treating and delivering over 1 billion gallons of water per day. Entire business of the company is regulated by the PUC or Public Utility Commissions. Now this is one of the major risk areas for the investors interested in buying the shares of this company. If by any chance, the PUC changes the norms and standards for providing the water, it will have a direct impact on the business of American Water Works.

According to the filing, American Water serves 15.6 million people in 32 states and Ontario, Canada. The company has nearly 7,000 employees.

In 2007, American Water's loss from continuing operations more than doubled to $342.3 million, compared with a loss of $155.9 million in 2006. The company's revenue rose 6 percent to $2.21 billion, from $2.09 billion. American Water noted that it is working to correct several weaknesses in its internal control over financial reporting.

Goldman Sachs Citigroup and Merrill Lynch have been appointed as the IPO's lead underwriters. The other underwriters are Credit Suisse Securities, JP Morgan and Morgan Stanley, among others. The underwriters have been given an option to buy up to 9.6 million additional shares from the selling stockholder.
The company plans to list its shares on the New York Stock Exchange under the symbol "AWK." Table of Contents

Chiripal Industries IPO Review

Chiripal Industries Limited, which is in the textile business of manufacturing readymade garments, is planning to come out with its IPO.
The proceeds or money raised from the IPO are expected to be in the range of 120 Crore Rupees. The Company has recently filed the Red Herring Prospectus with SEBI.

Price Band of Chiripal Industries IPO: Rs. 80 to Rs. 90 per share

Face value of Chiripal Industries IPO: Rs. 10

No. of shares to be offered: 14.2 million shares

Chiripal group is already on the stock market – it has other group companies like Nova Petrochemical and Nandan Exim Limited already listed on the stock exchanges. From the money raised from the IPO issue, the company will utilize around Rs 53 crore to fund its capital expenditure plan and will invest Rs 6 crore in its subsidiary Chiripal Lifestyle Ltd, to finance the first phase of its 20 retail outlets 'ConneXions'. With the retail sector getting fiercely competitive, it will be interesting to see how much market share the Chiripal Industries IPO can expect. CIL will also utilise part of the raised fund to acquire 43% stake in Vraj Integrated Textile Park Ltd - a Rs 111 crore integrated textile park. The remaining funds will be utilised as working capital for the company.

Related: Bharat Oman Refineries IPO

Other than that, the company has given some concrete plans for the IPO money raising. The plan includes setting up a new yarn dyeing facilities, fabric dyeing facilities and weaving facilities and expansion of its POY, FDY, textured yarn facilities, warp knitting facilities, embroidery facilities, processing facilities and readymade garments facilities. CIL will also invest around Rs 30 crore in setting up 7.5 mw lignite-based power plant to cut down on its power cost.

Let’s see when this IPO hits the market and how does it perform. Table of Contents

Bharat Oman Refineries IPO: Bharat Oman IPO

Bharat Oman Refineries, which is a 50-50 joint partnership among the government of India owned Bharat Petroleum Corporation (BPCL) and Oman Oil Company (OMCL), is expecting to raise Rs 2,400 crore from the primary market, through the IPO book building process.The joint venture company has filed the red-herring prospectus with SEBI on Friday for the IPO.

The major portion of the money raised from this IPO will be utilized to finance the six million tonnes per annum refinery at Bina near Sagar district in Madhya Pradesh, that BPCL is planning to start. Initially, the BPCL company had plans to start this refinery more than a decade ago, but due to the delay of several years (or decades), the investment has run into losses and they need more money to be pumped in to start the refinery. The cost has increased by more than double due to the delay. So who pays for the delay and mismanagement of the company? The answer is simple, let the investors pay for it. The primary IPO market is there to fund for the mistakes of the company management. If this is the situation and track-record of the past, God knows what the company management will do with the money raised in future. They can give several reasons – government policy, land acquisition, proposals, financing, etc. etc.. But wont these be problematic for the future as well?

Anyways, after the IPO, the company’s debt equity ratio will stand at 1.6:1. The remaining Rs 1,600 crore will come from BPCL, OMCL and the Madhya Pradesh government as their equity contribution.

The present status of the project at Bina is that almost 50% of it is complete. The work is expected to start in full swing in the 2010.
The refinery is designed to have a crude oil processing capacity of 6-million metric tonnes per annum and a higher complexity factor of 9.1, as measured by using the Nelson Complexity Index. The project also includes a crude oil importing and storage system in Vadinar, Gujarat, consisting of a single-point mooring facility that can receive crude oil shipments from very large crude carriers of up to 320,000 dead weight tonnage and a crude oil terminal with a capacity of 480,000 cubic meters.

Oil is riding really high. With the crude oil prices touching a high of $112 a barrel in the recent past, it is expected that the company will be able to sustain the return on investments. Let’s see how this IPO figures out. Details are awaited for the price band and listing date of Bharat Oman Refineries IPO
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Bear Stearns ESOP: Employees make significant loss

Not only the investors, but also the employees of the recently bursted Bear Stearns company are facing the heat of losses.

As I've explained in my previous article, Whether employee should opt for ESOPs?, the Bear Stearns employees have lost miserably on their stock holdings.

Employees owned almost 35% or one-third of Bear Stearns Stocks. With the collapse of the financial giant, these employee stock holdings have gone to zero value, making all their investments a 100% loss making venture.

An employee who acquired Bear Stearn's stock anytime from 2004 through 2007 stands to lose at least 97 percent of his investment if this deal closes.

Repeatedly, people keep taking about diversification. But they fail to diversify between their jobs and other sectors. Buying ESOP's or stocks of your own company is nothing but making a fool of yourself. If the company does well, you make fortune. But if it fails, you end making loosing entire money - your job is gone, so is your investment.

hence, be careful when buying stock options. They are not good from the diversification point of view.

LifeWatch Cancels IPO

Lifewatch corporation became the latest firm to cancel its IPO.
It has joined several of the firms which have canceled the IPO in the recent past amid high market volatility and uncertainty.

The primary purpose of the IPO was to use the money collected through the IPO for repaying the debt. Somehow, I do NOT usually like this kind of idea of using the public money to repay the debt. Though the company management has said that this cancellation of IPO has been done as the company board believes that it is not in the interest of the company to come out with its IPO, but the main reason that seems to me is that the high market volatility in the stock markets may have been seen as hampering the money collection process.


LifeWatch Corp., which makes remote heart monitoring devices, has canceled its proposed initial public offering, according to a Securities and Exchange Commission filing on Friday.

LifeWatch first registered for an IPO in December 2006. On Friday, LifeWatch said its board determined that the IPO is not in the company's best interests but did not provide the reasons for that decision.

The Buffalo Grove, Ill.-based company planned to use the IPO proceeds to repay about $27.7 million of its outstanding debt, to launch and market services for the LifeStar ACT cardiac event monitoring device and for other corporate purposes.

LifeWatch is a subsidiary of Card Guard AG, which trades on the SWX Swiss Exchange.

Cowen and Co., Jefferies & Co. and Piper Jaffray were expected to underwrite the IPO. LifeWatch had planned to list its stock on the Nasdaq Global Market.

CIAL IPO: Cochin International Airport IPO

CIAL or the Cochion International Airport Limited is planning to come out with an IPO or initial public offering.
The IPO is expected to collected somewhere in the range of Rs. 2500 Crore from the IPO.

The plan is to sell around 26% of the shares in the CIAL or Cochin International Airport IPO limited, through the IPO book-building process. The 2500 Crore Rs. raised through this IPO will be used for various purposes.

It will be used for constructing an aerotropolis, a maintenance, repair and overhaul (MRO) unit, and also one aviation academy nearby the airport.

Out of the 26%, 20% will be given to the public through the IPO, which remaining 6% is reserved for the employee stock option plan, ot ESOPs, as a benefit for the employees.

Just before the IPO is brought to the market, the CIAL will tie up for an strategic alliance with 2 firms of international exposure to finance the projects. It is also planning to build a five-star hotel, two budget hotels, a convention centre, an amusement park and a cultural park as part of its aerotropolis that will come up over 500 acres, while the MRO is slated across 40 acres.

The IPO is coming up in 2009. The IPO is expected to do well, as this will be more of a service provider business, rather than dependent of the clients for complete business - like that of an airline. With millions of Keralietes moving abroad and commuting frequently through Cochin airport, this seems to be a profitable business. Let's see how this IPO performs.

Evergrande IPO Cancelled

It's not just India and USA where the IPO's are being cancelled. It's also happening across the globe.

The Evergrande IPO (read review of Evergrande IPO) became the latest victim of the market volatility and market sentiments and was cancelled from making a debut in the HongKong Stock exchange.

The $2.1bn Hong Kong IPO, which was supposed to hit the markets very soon, was finally called off. The owner of the Evergrande Constructions, was supposed to list his name among the world's richest individuals had the IPO been listed at his expected price. but unfortuantely, things work randomly and the Evergrande IPO came to a stand still and was finally cancelled.

The market in Hong Kong has plunged in the last few weeks following a string of bad news from the US, including the collapse of Bear Stearns. The benchmark Hang Seng Index has dropped 24.1 per cent since the start of the year.

Almost 8-9 companies have cancelled or delayed their IPO listing this year in HongKong, given the bad news and market conditions in HK as well as in US. The company, which began bookbuilding on March 6, is understood to have decided to delay the IPO after failing to receive enough orders from retail and institutional investors by the time subscriptions closed on Wednesday night. This is in spite of the developer extending the subscription period of its retail offering by one day.

So for the moment, there is no respite for the IPO's waiting to come into the market.

OGE Enogex IPO: Price reduced

The OGE Enogex ipo which was initially slated to come out with the price band of $18 to $20 a share has lowered its price band to a much lower price. now it will be available in the price range of $16 to $18 a share each.

The OGE Enogex firm is planning to offer a staggering 7.5 million shares throught the initialpublic offering or IPO, as per the details filed by OGE Enogex to EC or Securities and Excahnge commission of USA.

There is no information about why the company has cgone for a price cut evene before the IPO was brought to the market, but experts believe that it is the market volatiltiy which has forced the company to go for the price cut for its IPO.

the details have been filed with the SEC. let's see when this IPO makes it to the market.

Ebay fires employees: lay-off 125

Its the turn of ebay, another tech company to show door 125 of its staff.

The reason, as cited by the ebay officials, is that company wants to focus on the website improvement and hence the cost cutting that it will have by firing 125 of these employees will go towards making necessary savings and contributions towards the "improvements".

So ebay now has around 15,500 employees spread across the various location across the globe.

Some of the employees who were fired worked for PayPal, eBay's online payment service.

Recently, it was Citibank which announced layoffs, and now the online shopping website goes on a cost cutting spree. No respite is in place to the US employees.

Citibank lay-offs: fires employees

Another credit crunch, another bank suffering the aftermaths of subprime mortgage crisis and finally going for a headcount reduction.

As per the enws, the famous Citibank is planning a massive lay-off, much more than what was expected as compared to lat year.

traditionally, the citibank employees, bottom 5% of them used to be fired on the basis of performance. However, this year, the no. is expected to be much higher than last years. citibank is citing the reasons of cost cutting and expansion of business in other regions, which may appear to be more profitable.

Needless to say, the majority of layoff for citibank emplyees will be those who will be fires from the mortgage and loans disision of citibank banking.

Ot of the total 60,000 citibank employees - around 4,200 jobs will be cut. moreover, apart from these 4200, there can be many more rounds of layoffs, the second one expected to reduce around 2000 citibank employees.

Citigroup employs about 320,000 people around the world. Even before the credit crisis started last summer, the company announced that it was reducing its staff by 17,000.

Air India IPO

The government which was planning the IPO or Initial Public offering for state owned Air India, has now said that the Air India IPO will come at a “suitable” time.
Few months back, after a lot of hassles the merger of Air India and Indian Airlines took place, which led to the creation of a single entity called Air India.

The Air India IPO was slated to come in the early part of 2009, but amidst the high level of volatility, the IPO plans have been put on hold for the moment. The left backed government is also unable to find a consensus with the left parties for floating the Air India IPO.

There is a proposal for offering around 10% to 15% shares to the public through the IPO book building process and also offer stock options to the employees of Air India to keep them happy.
Let’s see when this IPO finally makes it to the primary and secondary stock markets. Table of Contents

After IPO, Mutual Fund NFO Performance also goes down

How have the New Fund offers or NFO offered in the past performed?

We have seen a lot of mayhem in the IPO market, where the Reliance Power IPO could not live up to the investors expectations, Wockhardt and Emaar MGF IPO were cancelled. Hundreds of other IPOs were either delayed or cancelled. How about the Mutual Fund NFOs? How have the recently launched NFO performed?

As per a new study, almost 72% of the total 28 Mutual Fund NFOs launched last year with a offer price of Rs. 10 are trading or having their NAV well below Rs. 10, in the price range of 6.7 to 9.7 Rs. Out of the remaining, only 18% are able to trade above the levels of Rs. 10.

The effect are so bad that even if a NFO appears to be a good buy in terms of the value it creates (??), then also the investors are not opting for it, given the high level of market volatility. Not only the actively managed funds, even the funds that were advertised as being backed by quantitative methods, where complex algorithms were used - have performed poorly.

The only exceptions to this trend however; have been the funds investing in gold or gold-related equities. The Gold ETFs (exchange traded funds) which came to the market last year are today trading at all time highs. Similarly with physical gold in great demand, the companies mining the precious metal are undoubtedly the major beneficiaries. And the results are getting reflected in the returns generated by the gold fund. Anyways, it’s only the timing that matters. Gold may be outshining stocks now, but silver is way ahead of gold in terms of pricing. Unfortunately, we do not have any silver based ETF.
It’s only a matter of time. Which instrument will give what returns in what time is not known by anyone. Table of Contents

Gold Investments? Gold price rising again: Consider Gold ETF

Nothing comes for free in this world. Just after Fed declared a 75 basis points rate cut, the worries for higher inflation were automatically in.
Bernanke also included a formal warning about inflation and the effect is seen immediately.

After waiting for 3 days, the Gold prices have jumped for the first time in last 3 days. Even the other precious metal – silver – went upwards.

As per the commodity analysts, the Gold prices will continue to rise further. Oil prices are already on the high and a weak dollar, which forces gold prices upwards. In the recent development where Fed has gone for rate cut as many as 6 times, the gold is expected to continue its bull run.

People with limited savings may not be able to purchase the gold for investments, hence they are advised to opt for Gold ETF’s or Gold Exchange traded funds.
Gold for immediate delivery, which had dropped 2 percent yesterday, rose as much as 0.6 percent to $988.55 an ounce, which is 4.3 percent below the all-time high $1,032.70 set March 17. It traded at $987.66 at 10:55 a.m. in Tokyo. Silver for immediate delivery gained 0.3 percent to $19.78 an ounce. Table of Contents

Visa IPO raises a record 17.9 billion $

The Visa IPO (Read Visa IPO review)has managed to raise a record 17.9 million dollars through its Initial Public offering.

Being at the right place at the right time just helps in doing 90% of the task. It was the day when Fed has cut the rates by 75 basis points. It was the day when Goldman Sachs and Lehman Brothers have beaten the street expectations, contrary to the rumors that after Bear Stearns went burst, Lehman Brothers can also go burst.

San Francisco-based Visa, the world's largest credit card network, sold 406 million class A common stock for $44 per share, above the forecast range of $37 to $42.

Visa shares will begin trading on the NYSE or New York Stock Exchange on Wednesday, 20th of March.

When things start to go bad, one collapses after other. When things start to improve, one follows the other. It’s just the timing that has helped, otherwise how many times do you see a rally of 420 points or 3.51% in Dow Jones.
Hopefully, the Indian & Asian stock Markets will also follow suit today, as the Asian markets have been waiting for some triggers from US Fed. Table of Contents

IRS Tax Rebate: Schedule for Tax Refunds

Wondering when will you receive your tax refund or tax returns?

Following a generous Tax refund scheme, the schedule for sending out the tax refund has been decided by the IRS. It depends upon your SSN or Social Security number, the mode of your desired payment type (electronic fund transfer or paper type) and the amount.

The IRS on Monday said it would begin sending out 130 million tax rebate payments aimed at boosting the economy on May 2.

Here is the table as available from IRS about when can you expect the tax refund money or checks to be dispatched to you.

Direct deposit payment

If last 2 digits of your SS# are:

Your rebate should be sent by:

00-20

May 2

21-75

May 9

76-99

May 16

Paper check

If last 2 digits of your SS# are:

Your rebate should be sent by:

00-09

May 16

10-18

May 23

19-25

May 30

26-38

June 6

39-51

June 13

52-63

June 20

64-75

June 27

76-87

July 4

88-99

July 11

Fed Mortgage Help Plan Outline

Fortunately, the US government and Federal Reserve or Fed is burning all night’s oil to not only find a solution to avoid the US economy from going into a recession, but at the same time, they are also up in arms to help the debt ridden mortgage borrowers who are facing the dangers of foreclosures and ultimately leading to the write-offs for the mortgage lenders. The Hope Now alliance, which was an initiative by Fed was aimed at helping the debt ridden mortgage borrowers. Very recently, the Bear Stearns Bank was sold out to JP Morgan due to subprime mortgage crisis.

The Fed chief, Bernanke, has come out with an outline including 4 key points that the Fed is proposing to avoid the mortgage crisis. All these 4 points are targeted more towards the lenders, as they are the ones who tend to get carried away for want of generating more and more business and end up offering risky credits to the much ignorant mortgage borrowers, who are unable to pay back.

The 4 points that Bernanke proposed are as follows:
Prohibit mortgage lenders from offering mortgage loans which borrowers cannot repay. The major part of crisis in the mortgage sector was the result of the way mortgage operators were offering loans. They offered complex loans to ignorant borrowers which initially had a low interest rate of repayment, and later went on to a much higher interest rate making it unaffordable to the loan borrowers to repay the loan amount and ultimately, their loans resulted in foreclosure.

Make lenders verify the income and assets of the borrower. All one required to borrow loans was a declaration that he has this much income and this many assets. No verification was done by the mortgage lender to ensure that whether the loan borrower really had that many assets and income. Hence, the Fed will tighten the verification process for lending to see whether the borrower with poor credit or insufficient income really have the ability to to repay a loan.

Require escrow accounts for higher-priced loans. For borrowers who do not understand the scope of repaying loans, the Fed suggests higher-priced loans have a separate account for real estate taxes and hazard insurance, which is standard in prime lending.

Ban repayment penalties including "loan-flipping. The Fed proposes to ban schemes in which lenders force borrowers to refinance at a higher rate that they cannot afford.

Hopefully, this will brng some respite to the industry in the long run. The less regulation a market has, the more prone it is for fallout. Lacking of asset checking and credibility checks and greedy mortgage lending practices were the main reasons for subprime mortgage crisis. Table of Contents

How Bear Stearns failed

What went wrong with Bear Stearns?
Why was Bear Stearns sold out just for $2 a share when just sometime back its share price was as high as $150 per share?

I’ll keep it short and simple. It was the subprime mortgage crisis that led to the fall of Bear Stearns.

Related: My view of Subprime Mortgage Crisis

How the 85 year bank Bear Stearns fell prey to subprime mortgage crisis? The real culprits are various investment banks – including Bear Stearns itself. These banks have to do business – with customers, high net worth individuals, with governments and with each other. They keep coming out with new and “innovative(?)” financial securities and instruments, which they trade with each other. In case of Subprime mortgage crisis, the same investment banks came out with a nice piece of mortgage backed financial securities.

What has happened is as follows: Subprime mortgages (basically loans to credit less individuals) were offered by the various real estate mortgage lenders (including different arms of big investment banks). Since they were offering loans, they required money to back them up. Hence these banks came out with “mortgage backed securities” and sold them to each other. These were the financial instruments, which had the guarantee of the real estate or houses that were sold through subprime mortgages.

However, when the subprime mortgage loan borrowers defaulted, these mortgage backed securities also went for a tailspin. The culprits were these investment banks who failed to realize the risks involved in these subprime mortgage backed securities and sold them aggressively. Bear Stearns is just one example of how one bank with 85 year old reputed history has fallen prey to market conditions.

Let’s also not forget what has happened with Northern Rock bank of UK.
Hopefully, this will be a new lesson to people who blindly keep on buying shares believing that banks are safe and have proper risk management systems. Table of Contents

Mutual Funds: Investor Friendly Prospectus

Aren’t you bugged and frustrated with the repeated information in the mutual funds prospectus that goes on page after page yet does not make any sense to anyone?


Related: Should you trust your mutual fund manager?

Well, that’s what most of the mutual fund investors believe. So SEC or Securities and Exchange Commission is planning to shorten the prospectus for mutual funds and come out with an investor friendly prospectus with much less but precise information.

The idea is to help the public zero in on the key performance, cost, risk and other information about their funds, rather than get overwhelmed by the details. Mutual Funds will now have shorter prospectus or “Summary Prospectus” for their mutual funds. They will cite only the basic details like investment plans, investment style and objectives and if the investor wishes, then he may ask for and get a full length prospectus as well.

The idea will be enforced by this year end, however, no date has been finalized.

Hopefully, this new initiative will help investors look at the precise details about risk and investment factors, which in the present form, is being ignored because no one has the time to read all the lengthy reports. Table of Contents

Pogo Jet IPO postponed

Pogo Jet has postponed its Pogo Jet IPO (read review) or Initial Public offering, citing the reasoning of market volatility.

Except for the VISA IPO (Review), which is slated to be listed on 20th of this month, the IPO market has come down substantially. People are finding it more and more dangerous and risky to bet their money in the IPOs so as to make a quick buck. However, the market volatility and existing situation has made the investors worried about the returns in the market.

Pogo was supposed to offer a total of 7 million shares within a price band of $12.5 to $16.5 per share. The proceeds from the IPO were expected to go towards purchasing and leasing of new fleet of aircrafts. Table of Contents

Red Chillies Entertainment IPO

The King Khan led Red Chillies Entertainment is all set to make a mark in the stock markets of India through a proposed IPO.
It seems that Shahrukh Khan is all up to collect money through IPO from the Indian people, the ones who have made him to No. 1 in the media industry.

After making millions from films & advertisements, he has also made an entry into the cricket business by purchasing the Calcutta Knight Riders team for IPL. And now, he is headed towards the stock markets for collecting more and more money under the name of Red Chillies Entertainment IPO.

Already, the stock market is flooded with entertainment and media stocks – Balaji Telefilms, Zee Entertainment, Mukta Arts, UTV, etc. and now king khan making an entry into this sector will make it more interesting. As per the analysts forecast, despite the high volatility and uncertain returns of the stock markets, the entertainment and media sector is expected to give positive returns. Seems like King Khan is expecting to capitalize on this opportunity through his Red Chillies Entertainment IPO.

Related: Should you apply for an IPO?, Review of Kiri Dyes IPO & Review of Titagarh Wagon IPO

The brand name of Khan rules India. Just 2 movies, ChakDe and OSO, last year made him amass more than 100 Crore Rs. No wonder if the IPO of Red Chilli Entertainment will make him another richest of the rich Indians in the Worlds top rich lists.
He has plans to setup a gigantic studio and also to start a animation unit under the name Red Chillies Entertainment.

If rumors are to be believed, then as per the news, Shahrukh is already in talks with several bankers. While ICICI bank has already given him a lot of assurance for his Red Chillies Entertainment IPO

No date has been finanlized about when this Red Chillies Entertainment IPO will be brought to the market or listed and what will be the price band of the Red Chillies Entertainment IPO offering. Let’s wait and watch to see how things proceed with the Red Chillies Entertainment IPO. Table of Contents

SBI MF Real Estate Equity Fund Review

One of the Indian’s largest mutual fund houses have filed application with SEBI for yet another new fund or NFO, that too in the Real Estate or Infrastructure sector.
The fund will be launched with the name of SBI Real Estate Equity fund or
Magnum Sector Funds Umbrella (MSFU) Real Estate Equity Fund. As per the offer document, the aim of SBI MF Real Estate Equity fund is to provide investors an opportunities for long-term growth in capital through active management of investments in equity and equity-related instruments (including derivatives) of companies in the realty and similar sectors and in debt and money market instruments.

The SBI Real Estate Fund scheme will be available in 2 plans:

1) Growth Option: Where the dividend money will be re-invested
2) Dividend Option: Where the dividend money will be paid to the investors

Unfortunately, Tax benefit is NOT available under the SBI MF Real Estate Equity Fund.

It is an open-ended scheme and it would be available in Retail and Institutional Plan with growth and dividend options.

Minimum investment for the individual retail investors is Rs 5,000 while under the institutional plan, it is at Rs 5 crore.

The SBI Real Estate Equity fund will be tracking the benchmark composite benchmark created using BSE Realty Index to the extent of 60 per cent of the portfolio and BSE 100 for the remainder 40 per cent.
So ultimately, it seems to give a mix of Real Estate as well as other BSE 100 companies when it comes to performance management and tracking.

However, one thing to note is that the Real Estate index is dominated primarily by the Real Estate giant DLF – which has a 35% weightage to move the Real Estate index up or down. Probably that may be the reason why the SBI Mutual Funds have kept a portion of this fund benchmarked against BSE 100.

No details are available about when this NFO will be made available. Investors who are really bullish about the real estate price rise, which is witnessing a downfall in US and UK markets, may like to take a bet! Table of Contents

Kiri Dyes IPO Review

Kiri Dyes and Chemicals Limited is planning an IPO to raise up to 563 million rupees.
The IPO would be used to sell around 3.75 million shares in a price band of 125 rupees to 150 rupees per share.

The Kiri Dyes IPO will open from March 25 to April 2, 2008

The money collected through the IPO would be used to set up a new business unit so as to ensure smooth supplies of raw material for the primary products of Kiri Dyes – namely, dyes intermediates.

The company is based in Ahmedabad. It manufactures dye intermediates that are widely used in textiles, paint and acrylics, leather and printing ink industries. Since it is a Gujarat based company, it has most of its customers who are in the business of textiles too based in Gujarat, making it easy for market penetration. Not only it has national clients, it also exports almost 50% of it production to overseas countries like Korea, Turkey, United States and Taiwan.

A portion of IPO proceeds will also be used for enhancing facilities at the existing units. The new unit to be setup will be producing sulphuric acid and oleum, key raw materials for dyes, with combined capacity of 1,80,000 metric tonnes per year.

Related: Should you apply for an IPO? & Review of Titagarh Wagon IPO

So in a nutshell, the company is looking for using IPO money to capitalize growth on existing platforms. Has a heavy dependency on the client industry sectors, so one needs to be careful about the downtrends in the industries like Textile and leather, which may lead to a downtrend for Kiri Dyes stock price as well.

Not much of valuation information is available. So we cannot get any fair valuation of the IPO stock price. One will have to make a bet while applying for the Kiri Dyes IPO. Table of Contents

Review: Titagarh Wagons IPO Review

IPO business in India and the world is not taking any break.
Despite the debacles of large IPO’s like Reliance Power, the market is being flooded with IPO’s one after the other.

It’s now the turn of Rail wagon producer from the private sector, The Titagarh Wagon to come out with an IPO. It is making an initial public offer to sell 23,83,768 shares with a face value of Rs 10 at a price to be determined through 100 per cent book building process. The issue will open on March 24 and close on March 27.

The price band for the Titagarh Wagons IPO has is in the range Rs 540 and Rs 610 per share.

Around 15,000 shares will be reserved for the eligible employee of Titagarh Wagon.

As per the news, At least 60 per cent of the net issue will be allocated on a proportionate basis to qualified institutional buyer, 5 per cent of the QIB portion will be allocated to mutual funds, and the remaining will be allocated to the QIB bidders including mutual funds. Further, not less than 10 per cent of the net issue will be allocated on a proportionate basis to non-institutional bidders and 30 per cent to retail investors.

The money raised from this IPO will be used for multiple purposes
• Setting up an EMU manufacturing facility at Uttarpara unit,
• Modernising and expanding the existing facilities at Titagarh and Uttarpara units,
• Setting up an axle machining and wheelset assembly facility at Uttarpara unit,
• Constructing a corporate office and a design cum research and development office,
• Strategic acquisition or investments, f) Brand building exercise and g) General corporate purposes.

The primary business of Titagarh Wagon is to manufacture special purpose wagons, and shelters and they primarily cater to the needs of clients like the DRDO, Ministry of Defense and so on. Apart from this, the company is also in the business of other special purpose wagons like Marry-go-round, etc. Though limited in customer base, the requirements in this field are aplenty and company needs to keep on making changes to the designs and shapes of the wagons and other products it manufactures.

The lead manager to the Titagarh Wagons IPO are Kotak Mahindra Capital and the co-book running lead manager is JM Financial Consultants.

Related: Should you apply for an IPO?

Interestingly, this will be a different sector altogether for listing in the secondary stock markets. Not many companies are there in the rail wagon manufacturing, except for some government run industries. However, that also explains the risk of this business. The more competition you have from government backed companies, the more unpredictable the future business is. What is tomorrow the government scraps all the projects from Titagarh Wagon and start manufacturing all the required customized wagons at its own rails coach factory at Kapoorthala?

However, presently the order books of the company are full. So no problems for the company in the existing term. Investors who believe they can make a quick buck from this issue, can apply. Long term investors need to look out for government policies. Table of Contents

ICICI RICH ULIP NFO Review

ICICI Prudential Life Insurance has come out with its New Fund offer of NFO in the name of ICICI R.I.C.H. Fund or ICICI RICH Fund. Interestingly, they have a disclaimer saying that RICH does not necessarily mean Rich – it’s an abbreviation. In this article, I'll attempt to present a review of ICICI RICH (R.I.C.H.) fund. It should help you decide whether you should invest in ICICI RICH (R.I.C.H.) fund or not.

RICH stands for Resources, Investments, Consumption and Human Capital. So basically, what this fund will do is that it will invest in the companies which fall in the above 4 RICH categories and hence it will try to generate capital appreciation for the investors money in the long run. Suddenly from somewhere, these 4 categories have become the most promising sectors for ICICI fund management business. Does it mean that other funds from ICICI investing in other categories are not worth investing?

Then comes the advertisement part – There is a picture of 4 cricketers taken from behind their back. From the height & hair style, they seem to resemble Dhoni, Sachin, Bhajji and Ishant. There is a name on each of the t-shirt of the cricketers – Dhoni lookalike mentions “Resources”, Sachin for “Investments”, Bhajji for “Consumption” and Ishant lookalike for “Human Capital”. Not sure about others, but does Bhajji consume too much?? : -)

Anyways, the investment scheme is to invest in stocks and stock related instruments for the following four sectors:

Resources: Stocks and companies which belong to natural resources like Oil, petroleum, Natural Gas, Metals, etc.

Investments: Capital goods, Infrastructure, Engineering services, etc.

Consumption: Consumer durables, Entertainment, Media, etc.

Human Capital: IT, Technology, Biotech, any service or research oriented company stocks and shares.
However, I’m getting the question that what have they left out? Almost every single stock sector has been covered. What are they trying to invest in in the name of RICH? Don’t they think simply buying an ETF would be better option than offering this new scheme.

Related: An example of ETF

Portfolio allocation will be 80% to 100% in stocks, shares and equity related instruments, and remaining 0% to 20% will go to Debt related, Money market instruments or cash holdings of the company.

NFO for ICICI RICH fund will open on 15th march 2008.

Each NFU Unit will cost Rs. 10 per unit.

Tax Benefit under ICICI RICH (R.I.C.H.) fund: Not Available!

No info is available about the entry load and exit load of the ICICI RICH NFO

The scheme is a ULIP or Unit Linked Investment Plan and will work on the basis of NAV or Net Asset Value as the value of the underlying stocks and shares will change every business day.
Table of Contents

Cost Cutting in IT companies on US recession fears

The world is moving through really tough times, so are the IT companies. With the clients cutting heavily on the IT spending and new projects being scrapped, the IT companies in India are doing all they can to cut the costs.

The IT companies are really worried about the recession fears in US and have gone to take measures to cut the costs as much as they can. In India, it was TCS which went for a layoff following TCS salary cuts. Then it was IBM which axed 700 jobs across all over India.

Following that sequel, the IT companies went for a Reduction in Perdiem for onsite visits. And now, even the petty things like internal travel is under the scanner for cutting costs.
I As per the news from the leading newspapers from India, Senior executives, including in the vice-president and general manager levels, are being asked to travel by cabs, that too with one or two other colleagues.

Someone required to travel from Bangalore to Hyderabad is no longer allowed to book a flight – he is asked to hire a cab, that too with 2-3 colleagues. The journey may be tiresome and time-consuming, but saves a lot on costs – that is what matters most!

From Bangalore, a return AC cab with infotainment on board costs Rs 7,500 to Hyderabad, Rs 5,000 to Chennai and Rs 7,500 to Kochi, against the return air fare (for a single person) of Rs 4,500 to 6,500, Rs 3,000 to 4,000 and Rs 3,500 to 4,500 respectively. “The logic is that at least three employees can get to a client’s location and return at a minimal cost. The same cab can be used for local logistics support at the client’s place, which again is economical,” said a logistics in-charge of a tier 1 tech major.

Even the individual managers and executives do not like this idea. How can they like it – it’s human nature. Someone habitual of staying in a 5 star hotel cannot be comfortable in a road-side lodge, even if it comes with a cozy AC. People also find it humiliating – especially with the way relatives look at you. Someone who used to travel by flight is now moving around in a cab.

No one knows whether it is a short term cost-cutting business or will this last long, but one thing is sure. The Companies are making a good use of the timing. In India, this is the appraisal and salary review time. They may be taking all these steps to create a hyper atmosphere to give minimal or no salary hikes – that may last for next 12 months. Table of Contents

Evergrande IPO Review

A new name is set to top China's rich list by the end of the month following the planned initial public offering of one of the country's largest private real estate developers.

Chinese largest private Real estate developer, Evergrande is all set to make a debut in the stock markets. The Evergrande IPO is priced in the range of HK$3.50-HK$5.60 and if it is offered at the higher side of the price band, then the promoter of the issue will be worth almost 7.2 billion $ after the issue. His value is going to rise even further if he succeeds in listing the Evergrande IPO on the Hong Kong stock exchange, which is expected to be till the end of March 2008.

Related: Oberoi Constructions IPO, Review of Visa IPO & Should you apply for an IPO?


Coming to valuations, the Evergrande IPO seems to be offered at a discount price, as the price band of HK$3.50-HK$5.60 is well below the value as compared to the assets the company has. Fifty percent of the money raised through the IPO book building process will be used to pay for the land which the company has already purchased on lease. This indicates a problem of funding though.

Credit Suisse, Goldman Sachs and Merrill Lynch have been jointly appointed the book-running lead managers for the Evergrande IPO issue.

But its not easy for the Evergrande IPO to be listed. The Chinese government is strict to keep the real estate prices in check and hence the credit limit available to the real estate sector will be limited. Ultimately, this IPO may o may not even survive. Let’s see how things proceed with this IPO, but if it comes out, then it will be a major IPO in the history. Table of Contents

VIsa IPO: Subscription Status & Listing Date

Visa IPO is drawing a lot of attention. It is expected to be listed on March 20. But the issue has been heavily subscribed.

The San Francisco-based credit card company is offering 406 million shares in the price band of $37-$42. This Visa IPO is an attempt to raise just below $16 billion, if we take the average price of the price band. Definitely, it will exceed the $11 billion raised by AT&T Wireless in 2000 – which was the biggest IPO ever in the history of American stock exchanges – Visa IPO is et to change that benchmark.

Interestingly, though the Visa card is in the business of payment gateway and transaction processing, there are still doubts about the long run. The PE ratio of VISA offering is really high at 30, as compared to that of MasterCard which was at 11 when it was listed on stock exchanges.

Related: Read the detailed Review of Visa IPO & Should you apply for an IPO?

Some individuals also have doubts about the long run of VISA and MasterCard. One individual has even left a comment as follows: “Credit Cards will be a thing of the past in a few years. Biometrics will eliminate the need to carry plastic and eliminate the possiblity of credit card fraud and thief, identity thief too. Whole new biometric based transaction networks will replace VISA and MASTERCARD. That's why the banks that own VISA are cashing in on it now. It has been a cash cow for them but it won't be worth jack soon.”
Anyways, everyone has a different opinion and perception. The Visa IPO is set to be listed on 20th March. Lets see how this IPO performs. Table of Contents

Where are rich investors investing their money?

Some interesting findings for the year - Where are the richest of the rich affluent investors putting their money and where they plan to put it in the coming year?

A research study conducted by The Phoenix Companies has come out with interesting results. As per the study, the affluent or rich investors invest significantly in both mutual funds and alternative investments, and half of them plan to change their investment allocations in the next year.

The detailed results of the entire study in detail is available at the following PDF file: (https://www.phoenixwm.phl.com/servlet/DocDelivery?DocId=docu_publ_advi_insight_0108.pdf&DocType=0)

Below, I aim to present the summary of the research study:

The research focused on 2 areas:
• Investments in mutual funds and
• Investments in alternative investments.
Alternative investments are defined as investments other than stocks, bonds or mutual funds, including real estate other than buying a second home.

In fact, 81% of respondents responded by mentioning that they have at least one mutual fund in their investment portfolio outside of a retirement plan like IRA, 401(k), 403(b), or other retirement plan and 74% of the respondents hold some or the other alternate investment.

Among the alternative investments, real estate (constituting around 45%) is the most widely held alternative investment, followed by exchange-traded funds (ETFs) (constituting around 30%), hedge funds/hedge fund of funds (constituting around 25%), and private equity funds (just over 20%).

This may come as good news to the Mutual Fund holders. Typically, I am NOT a person who would recommend investing in Mutual Funds because of the costs and fund management charges. But the 81% among the richest of riches having an investment in Mutual funds shows that they trust their mutual fund managers. Now I don’t know if the affluent investors get some rebate in terms of fund management charges or not.

Related: Should you trust your Mutual Fund Manager?

However, I am a biggest supporter of ETF’s or Exchange Traded Funds, and I am happy to see that 30% of the rich respondents trust that investment.

Related: Simplest Investment Strategy & An example of ETF or Exchange Traded Fund

That was about the past. What about the future? For 2008, the study reveals that affluent investors have no common plan when it comes to investment in these turbulent times.

49% of mutual funds owners and 52% of alternative investment owners said they will continue to invest the same amount or more in the coming year, while 51% of mutual fund owners and 48% of alternative investment owners expect to be bearish and invest less in the coming year. This shows a clear flipping and uncertain position.
So effectively, the investor mood is really really low when it comes to investor confidence in the economy. Call it the US recession fear, or the shaking up of global financial markets, the uncertainty that looms over the global markets is also reflected in the rich investors mood. Table of Contents

Mutual Fund Performance: Debt v/s Equity

How have the mutual funds performed over the recent past? A study by Crisil Fund Services reveals some details. I usually do not recommend anything based upon the past results, as past performance of the mutual funds are no guarantee that the same will be carried on in the future. But its nice to see and learn about how the performance has been and observe what all is possible –which may be contrary to our assumptions.

Not surprisingly it was the Debt-oriented mutual funds that have continued to give positive returns in February, while almost all the stock or equity based schemes have given negative returns negative, as per the study conducted by Crisil Fund Services.

Crisil is a rating and performance monitoring agency and is in the business of providing fund valuations and assigning ratings to different bonds, companies and mutual funds and also provide risk management solutions to the Indian MF industry.

As per the news about the study , the highest monthly returns came from the liquid fund index, Crisil-LX, which was up by 0.66 per cent. This was followed by the Crisil STBEX, the debt index serving as benchmark for short-term bond funds and Crisil Fund-dX, the long-term bond funds index .
These returned 0.30 per cent and 0.28 per cent, respectively. Negative returns in this segment came only from the Crisil MF-Gilt index, the gilt funds index, which ended slightly lower at (0.02 per cent), a Crisil release said.

Meanwhile, all indices with equity components ended in negative over the month. The Crisil Fund-eX, the index for diversified equity funds, declined by 4.34 per cent, Crisil Fund-bX, the index for balanced funds, dropped 3.36 per cent.
Crisil MIPEX, the index used as a benchmark for monthly income plans, was down marginally by 0.13 per cent, it added.

However, even with negative returns in February 2008, it was the Reliance Mutual Fund which maintained the top spot. ICICI Prudential Mutual Fund retained the second spot and UTI Mutual Fund was at third place.

Always believing that more risky stocks will definitely give much better returns is a costly and highly vague assumption.
Markets work randomly – no one can be certain about what may happen tomorrow. Invest your money wisely and in the right instruments, and give it time to grow instead of playing around in short term trading. Table of Contents

Oberoi Constructions IPO Review (First-sight Review)


One after the other the IPOs are flooding the markets –atleast on the proposal as filed to SEBI.

In the past 2 years, Infrastructure has been the hottest sector in terms of returns. That is the reason why we have seen so many New NFO for Infrastructure Mutual Funds. The data revealed in the advertisements of Mirae Asset Mutual Fund also tells the same story.

Now is the turn of the multi-billionaire Vivek Oberoi or commonly known as Vikky Oberoi led property developer Oberoi Constructions, to come out with a mega IPO.
As per the news, the plans are to launch the Oberoi Constructions IPO so as to raise around Rs 4,000 crore ($1 billion) through this IPO.

Morgan Stanley has been assigned the task to make a fair valuation of the Oberoi Constructions company. The money raised from the IPO will be used towards for acquiring land and fund upcoming new projects – a list which includes the Oberoi Garden City and four and five-star hotels all spread across the length and breadth of the country.

The company is really rich in terms of the assets it currently owns –that too in the prime location – it has a land bank of 130 acres mainly in the suburbs of Mumbai on the western sides. It has eight residential, commercial and retail projects under construction with a development potential of 21 million sq feet.

Though the stock markets are witnessing turbulent times and many IPO’s have been cancelled or delayed. But Vivek Oberoi is confident - “Stock markets will distinguish between the performers and non-performers. We are confident of a good issue,’’.

The company is building Oberoi Garden City, an 80 acre composite realty project including office complexes, malls, schools and residential townships with expected revenues of Rs 8,000 crore. The company has plans to build such projects in all the major cities including Chennai, Bangalore and Hyderabad among others. These projects will be spread over 80-100 acres. Based on land prices in different cities, these projects have a land acquisition cost of Rs 400 crore to Rs 500 crore and a construction cost of nearly Rs 2,000 crore. So the IPO of 4000 Crores will see 2000 Crores being devoted towards this land acquisition. Four hotels are planned in Mumbai and Pune. It is also scouting for properties wherever the company is building Garden City projects. The company is also looking at other infrastructure projects provided those projects have some mix of real estate elements.

The good thing about infrastructure projects is that they have some kind of “Real Worth” in terms of land and building, instead of the projected businesses like “Zero Watt Reliance Power IPO”.
The IPO is expected by the year-end. It’s a long time and hopefully markets will see some better situations by that time as compared to the current volatile situations. Wait for some more information about price band and size of Oberoi Constructions IPO. Table of Contents

CyDex Pharmaceuticals IPO

More and more IPOs are coming in the markets.
Visa IPO (read review of VISA IPO) is underway, along with Pogo Jet IPO (read review of Pogo Jet IPO). Yesterday, online advertising firm Eyeblaster applied for and IPO.

Today, the US Drug manufacturing company CyDex Pharmaceuticals Inc. has filed an application with SEC or Securities and Exchange Commission. CyDex plans an initial public offering shares through this IPO.

Based in Kansas the drug company has not yet revealed any details about the price band of the CyDex IPO, nor was there any information about the expected size of the CyDex IPO. However, if we consider the registration fees paid to the SEC for IPO, the offering price may sum up to $50 million. CyDex mentioned the total offering price was estimated solely to calculate its registration fee and may change.
CyDex has a nice collection of 12 different products, which use a drug formulation technology based on its patented Captisol cyclodextrins. Captisol cyclodextrins are designed to improve solubility, stability, bioavailability, safety and dosing of a number of active pharmaceutical ingredients.
CyDex has outlicensed its Captisol technology to a number of companies and has more than 30 agreements in place. The company currently receives royalties from Pfizer Inc. on its sales of Geodon IM, a treatment for bipolar disorder and schizophrenia; antifungal product Vfend IV; and Cerenia, which prevents motion sickness in dogs. It also receives revenue from Bristol-Myers Squibb Co. for Abilify Injection IM, which also treats bipolar disorder and schizophrenia.
As per the financial results of CyDex for 2007, it managed to earn $3.8 million in royalty revenue from outlicensees.

Related: Should you apply for an IPO?

CyDex plans to use the proceeds from the IPO to support clinical trials and further product development, to build its internal infrastructure and capabilities, and for working capital and other general corporate purposes.
However, it was a loss making year for CyDex in 2007.
CyDex posted a loss after paying preferred dividends of $7.1 million, versus a loss of $2.1 million in 2006. The company's revenue grew to $12.7 million, from $11.6 million in the previous year.

CyDex plans to list its shares on the Nasdaq Stock Market with the symbol "CYDX."
Table of Contents

Consulting Firms hot favourite at IIM

Another piece of news from the IIM’s. It’s the placement season at IIMs and firms are on hiring spree.
The students are making a fortune with the high level of salaries they are being offered. Here is the story about top paid IIM graduates & its underlying worth.

Now, this news is not about the highest paid salary. It’s about the trend that is going on.

This year, it seems that consultancy firms are the hot favourite of the students at IIMs. Till last year it was the investment banks which picked up not only IIM graduates, but even went to IITs to pick up B.Tech students. The trend has changed this year, and it is the consultancy firms like McKinsey, Boston Consulting, AT Kearney and Bain which are the hot favourite for the placements.

Now, Economic Times report this as follows – “It’s a win-win situation for both parties. For students, the attraction lies in significantly higher salaries as well as exciting roles offered both in India and abroad. The firms, on their part, stand to gain by getting to choose from a bigger pool of talent, which under normal circumstances, might have gone to i-banks.”.

This is something I cannot understand. How can it be a win-win situation? Are the graduates making a compromise? What were these consultancy firms doing last year when most of the top ranked students took up jobs at investment banking firms? How many of these graduates really really like to work at a consultancy firm? If Consultancy firms have won this year, weren’t they a looser last year? Will they be able to keep up the winning spree in next coming years?

Hundreds of such questions come up. Ultimately, it all boils down to one thing – randomness. Today, the investment banking and financial sector is witnessing a crisis period, so they are out. Till last year, they were the favorites. Hundreds of IIM aspirants may be having the dream of working in investment banking and that’s what may have taken them to IIM. But how many of those individuals are able to realize the dream today? No body knows. Figures and statistics for such data is difficult to get.

Things work RANDOMLY. You never know what you will get even in next month. Compromise & adjustments are to made at every stage in life, no guarantee of anything anytime. Table of Contents

UTI AMC IPO

One of the biggest asset management companies (AMC) of India, UTI AMC, which was planning to come out with an IPO has fallen victim to the market pressure.
The UTI AMC IPO which was set to hit the market this month, i.e. in March 2008, has been delayed till further notice.

UTI AMC is India’s third largest AMC and manages assets almost amounting to 53,00,000 crore Rs.

It mentioned that it is delaying the IPO due to “inappropriate” valuation of the UTI AMC before the IPO deal. Actual reason may be the turbulent market timings.

The plan was to offer around 5% of the shares to the public through the IPO process. While the financial investors had come up with a figure close to 8% of the asset under management for the AMC, the company still thinks that the valuations are not upto the expectations.

This would have been the firs ever IPO by an Indian Mutual fund company. Now, the AMC is looking at a possible date next month for the IPO, whose size was pegged at Rs 1,800-2,400 crore, the source said.

Related: Should you apply for an IPO?

Turbulence in the secondary market, which has seen the Sensex dipping by 24 per cent since its January peak, as also Emaar MGF and Wockhardt Hospitals withdrawing their IPOs due to weak investor response, is primarily responsible for the UTI mutual fund’s decision to delay its offer.

The latest development in the mutual fund industry was a big news last week when the Standard Chartered Mutual Fund was sold to IDFC.

While in December, Reliance Capital’s 5 per cent shares were sold to Eton Park hedge fund.
That deal valued Reliance Capital AMC at 13 per cent of its assets managed at that time. Hence the UTI AMC may be looking at that kind of valuations, in the range of 13-14% instead of the currently quoted 7-8%. Let’s see when this IPO finally makes to the markets. Only then one can look at the price bands and valuations of the IPO. Table of Contents

Eyeblaster IPO for NASDAQ Listing

It is learnt that the New York based online advertising company, Eyeblaster Inc. has filed an IPO application to SEC or Securities and Exchange Commission.
It is estimated that the Eyeblaster company is expected to collect money in the range of $115 million through the IPO or initial public offering. The application was made on Monday.

As of now, there is no information about the price range or price band in which the IPO will be offered. Though a figure of $115 million has been quoted, but the total offering price was estimated solely to calculate its registration fee and may change at a later stage. Lehman Brothers and Deutsche Bank have been appointed as the Book running lead managers for the IPO book building process.

The primary purpose of the IPO is to use the proceedings for “general corporate purposes, including working capital and capital expenditures”. It is also learnt that the Eyeblaster company may use a portion of the money collected through IPO to acquire or invest in companies or technologies which ultimately add synergy to the business of Eyeblaster Inc.
The company will list on the Nasdaq Stock Exchange with the symbol 'EYEB.'

Related: Review of Visa IPO, Review of Pogo Jet IPO & Should you apply for an IPO

It will be interesting to learn see how the IPO is received by the investors. Already, the sector of online advertising is hot with Microsoft making an offer to buy Yahoo and recently Google attempting to purchase DoubleClick.net. Eyeblaster is in the business of online advertising in various streams - campaigns across digital media channels, including online, mobile and in-game, and a variety of formats, including rich media, in-stream video, display and search.

As per the figures and news, In 2007, Eyeblaster's profit rose to $7.4 million from $3.7 million. At the same time, the company's revenue jumped 62 percent to $44.7 million from $27.7 million. Eyeblaster's customer base totaled 979 in 2007.
You never know that one fine day the Eyeblaster company may become a potential target for acquisition by the other big fishes of the pond. That will be the time when the investors and shareholders of this company will benefit substantially. Table of Contents

Reliance Power IPO: Complains

Reliance Power IPO was set to make history for the Indian Markets.
It was supposed to be the IPO that could make Anil Ambani the richest man of India, bypassing elder brother Mukesh Ambani. However, it did create history, but only on the other side.

The pain for Reliance Power IPO does not stop there. As per the latest news, SEBI has received 2261 complains, almost all from Retail Investors, against the Reliance Power IPO. The primary reasons for complains are No Refunds sent to the investors, No Credit/allotment of Shares and no receipt of interest on the delayed refunds.

Interestingly, almost all the complains have come from the retail investors, and more interestingly, the issue has reached the Parliament. The minister for finance has apprised the parliament that the issues have been forwarded to SEBI who have forwarded it to the concerned company which is looking into the matter.

Already the investors of Reliance Power Issue are beating their heads for the negative price movement they have seen in the price of reliance power after listing of the shares. Even a Bonus issue offer from the ADAG could not help the falling stock prices. Now the number of complains that have piled up is shattering the trust of the investors.

Related: Reliance Power Bonus Shares Allotment Date

Let’s see what is the outcome of all these complains. If you are one of the affected applicants of the Reliance Power IPO, then you must address your grievances to the concerned authorities without delay. Table of Contents

Mortgage Approvals Slump: Strict standards for Mortgage Approvals

The mortgage lenders are tightening their standards and guidelines to offer loans to the mortgage borrowers in the ailing mortgage industry.
Since January, the number of loans has fallen by 34 percent, all due to strict lending criteria.

So if you are a mortgage borrower and your mortgage loan application has been disqualified, don’t blame your mortgage lending company. Because, the entire mortgage market is collapsing and hence it is becoming difficult for the mortgage lending companies to offer any easy loans or mortgages.
The data from the Council for Mortgage Lenders reveals that 50,300 loans were made for house purchases in January, which is a clear 20 per cent fall from December 2007. The total loan or mortgage value of £7.8bn stands at 31 per cent less.

Banks are also not taking any chances. They are asking for more and big deposits and offering only smaller loans which are in multiples of the salary received by the individuals.
First-time buyers took out average loans for 88 per cent of a property's value in January, down from 90 per cent in December. They typically borrowed 3.32 times their income.

Fortunately, these are good times for some. If you have that extra money with which you can invest in a falling real estate market, then you must go for it and forget your investments for 3 to 5 years. Table of Contents

Heathrow & Gatwick: Pay more for landing

BAA owns the two busiest airports of Heathrow & Gatwick airports. It has recently got the permission to increase the landing charges which could inflate or increase the charges of using these airports to the tune of 20 GBP per passenger. The cost will be recovered from the airlines, which will ultimately pass the charges to the passengers and hence the passengers will have to shell out more money.

As per the news:
The Civil Aviation Authority (CAA), which sets the fees the airports can charge airlines, said on Tuesday that rates at Heathrow can rise almost 24 per cent next year to £12.80, with promised above-inflation increases then likely to take them to around £20 by 2013. Similarly, at Gatwick, the charges will rise 21 per cent next year to £6.79, and reach about £9 in the next five years.

And actually, BAA cannot be blamed for rising the landing charges. The number of passengers these airports are serving have gone up to the tune of almost 2 times since last year. Hence, BAA needs more money to maintain the airports. But airline companies said the fees would lead to higher ticket prices with passengers left paying more to finance the huge debts incurred by the Spanish purchaser of BAA.
Anyways, with the current decision in place, the passengers are sure to be made to pay more if they travel through Heathrow or Gatwick. Table of Contents

Ratnagiri Gas IPO

Ratnagiri Gas and Power (abbreviated as RGPPL), with primary which operations in the 2,140 mw power plant at Dabhol, Maharashtra, is planning to come out with its IPO to raise around 10 billion Rs. by selling a part of its shares through the book building process.

Interestingly, the company is jointly owned by another listed power company, NTPC, which was in the news recently after the debacle of the Reliance Power IPO, and was setting the benchmark of a perfect alternate to investing in Reliance Power. Other partner owners are Gail India Limited, and MSEB.

The primary reason for IPO of Ratnagiri Gas is that it is incurring a huge debt of 70 billion Rs. So from the 10 billion Rs. raised thrugh the IPO, the company will make a part repayment of debt to the tune of 5 billion Rs.

Related: Should you apply for an IPO?

The Dabhol plant will be fully operational by the first week of April when the third power generating unit is commissioned. Majority of the work on the liquefied natural gas (LNG) terminal has also been undertaken and it will be commissioned in November. The breakwater, which will enable the five million tons a year LNG terminal operate to full capacity, would be ready by the end of 2011.

No Information is presently available about the offer price, price band of the shares. The IPO is expected in October-November this year. Hopefully, situation will improve by the year and Ratnagiri Gas can think about capitalizing on the IPO business. Table of Contents

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