In a move aimed at helping investors take an informed decision on Initial Public Offers (IPO),the merchant bankers have begun disclosing the performance record of the IPOs managed by them in the past.
Sebi has it mandatory for the merchant bankers to make public the track record of the previous offers handled by them,and asked them to share the same with the prospective investors of any new IPO being managed by them.
In one of the first such disclosures,Edelweiss,City and Morgan Stanley — the three bankers of the upcoming IPO of the country’s largest commodity bourse MCX — have made public the details of the IPOs managed by them in the past.
Besides being the first IPO to provide such disclosures,MCX’s public offer would also make it the first exchange in the country to get listed and probably the first IPO of 2012 in the Indian capital market.
The IPO has also been assigned top-most ‘5/5’ IPO grade,indicating strong fundamentals of the public offer.
The track-record details have been provided in the final IPO document of MCX,which will hit the market on February 22 and would close on February 24,as also on the websites of the three merchant bankers,acting as Book-Running Lead Managers (BRLMs) of the upcoming public offer.
As per the disclosure,Morgan Stanley handled five IPOs in 2009-10 and four in 2010-11. Out of these,six IPOs traded at a premium on listing day and three at discount.
Further,three IPOs traded at a discount as on the 30th day of the listing,while six traded with a premium. Morgan Stanley has not managed a single other IPO so far in 2011-12.
The other banker,Citi,handled three IPOs in 2009-10,two in 2010-11 and one in current fiscal so far. Out of these,two traded at a discount on listing date and four at premium.
However,four IPOs managed by Citi traded at a discount on the 30th day of listing,as against two with a premium.
The third banker Edelweiss managed two IPOs in 2009-10 and six in 2010-11. Out of them,two traded with a discount and six with a premium on the listing date.
On the 30th day of listing,one traded with a discount and four others with a premium.
The bankers have also provided detailed information for individual IPOs handled by them,including their size,listing price and their comparison to the movement in benchmark indices for different periods.
As per Sebi direction,”the offer document shall contain adequate disclosures so as to enable investors to take well informed investment decisions.
“… It is necessary for investors to evaluate post-issue performance of the issuer in terms of disclosures made in the offer documents. This will also enable them to understand the level of due diligence exercised by the merchant bankers,” the regulator said in a circular last month.