April 25, 2011

Future Ventures Grey Market Premium - 0.35 p to 0.50 p - Satyakam Mishra

Future Ventures Grey Market Premium is 0.35 to 0.50 paise.

Satyakam Mishra
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Satyakam Mishra said...

Future Ventures IPO may only be a short-term punt

Short-term investors in Future Ventures, whose issue opened for subscription on Monday, can try their luck at the IPO as one expects active interest in the counter because of the big names involved.

But while the visibility of the Future Group is high, it has not exactly been a great ride for investors. The group went public one year before Infosys, but there the comparison ends. The financial track record and distribution to shareholders are miles apart since the two are in different industries.
In 19 years, Pantaloon Retail India (PRIL) – the flagship - had made just one bonus issue that too was issued after taking an exorbitant premium of Rs 490 for the Rs 10 paid-up share through its 1:5 rights issue! Post-rights, in the last five years, PRIL’s share has fetched only a modest annual return of 13%, including dividends, and the gain on shares allotted in Agre Developers Ltd.
The group’s second public company, Pantaloon Textile, subsequently renamed as Pantaloon Industries, too offered negligible returns in the first 10 years. For reasons best known only to the promoters, they de-listed the stock after an open offer in the year 2006.
The third public float of the group, Future Capital Holdings Ltd (FCH), was made at an ultra-high price of Rs 765 in early 2008. Incidentally, the same investment bankers Enam, JM Financial and Kotak Mahindra, who are managing FVIL’s present offer, handled the super-high-priced FCH’s IPO which has inflicted a loss of more than 75% on investors.

At a recent press meet, the promoter of Future group reportedly said that the investment bankers wanted a higher price for FVIL’s IPO but, keeping in view the losses suffered by FCH’s investors, he had opted for a very low price. One could well ask: if the promoter was concerned about the investing public’s loss, he could have done what ADAG’s promoter did. The Anil Ambani company reduced the average cost of public investors’ holdings in Reliance Power by issuing bonus shares (to only public investors) out of the exorbitant premium collected during the IPO.

Another public company, Galaxy Entertainment, taken over by the Future group in early 2006, too has a pathetic record to speak about. At the time of Future’s takeover, Galaxy was commanding a price of more than Rs 260 but today it is languishing at less than Rs 20!

April 26, 2011

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