Heard on the Street

Merchants of fear have doubts over MCX IPO

The market buzz is that the country's first public issue by an exchange is finally on track. Commodity bourse MCX had informed SEBI that it was going ahead with its proposed initial public offering. According to the grapevine, while the company is unpertubed by the ongoing turmoil in the stock market, some of the merchant bankers do not seem to share that confidence. These bankers are trying to persuade the company to defer its IPO plan, so that the shares can command a higher price once market sentiment improves.

When contacted, Joseph Massey, MD & CEO of MCX, declined to comment. Market participants say given the strong league of merchant bankers for the issue, raising Rs 600-700 crore should not be an uphill task. Recently, UTI MF deferred its plan to go ahead with its IPO. One thing is for sure.

Merchant bankers have finally become fearful of market fury after the failure of some high-profile public issues. It seems they have realised that irrespective of the company's pedigree or their own clout in the market, market sentiment is the decisive factor for the time being.


Minority shareholders bet on BASF India stock

BE IT a bull or bear market, minority investors appear to be convinced that they have the upper hand when it comes to promoters wanting to hike their stakes through an open offer. Share price of BASF India has risen close to 10% over the past one month on hopes that promoters will be forced to raise the open offer price, in case they are keen to hike their stake.

In May this year, the German parent of BASF India made an open offer to buy an additional 22.31% stake in BASF India at Rs 274 per share, to hike their stake to 75%. Since the acceptance ratio would be less than 50%, the stock, ideally, should have been shunned by arbitrageurs. But the stock price has now risen to Rs 276, an indication that minority shareholders are betting on an upward revision in the price.

In the past, many companies have had to raise their offer prices in the face of poor response to their proposal. The buzz is that investors who have recently bought into the stock are expecting a price in excess of Rs 300. But these players also have to bear in mind the fact that market conditions have changed dramatically over the last six months.

As on March 31, institutional investors control roughly 19% of the company, and their participation will be crucial if the offer has to succeed. On Wednesday, BASF shares closed at Rs 276.70, down Rs 0.30 over the previous. The open offer commenced on Wednesday, and the last day of tendering the shares is July 28.

(Contributed by Apurv Gupta & Santosh Nair)

The Economic Times 10 7 2008