Blog Panel: May 2010

The bad market conditions are putting pressure on the ongoing IPO of Standard Chartered IDR. However, if one closely observes, there is some opportunity emerging in the Standard Chartered IDR.

What’s the trade?

When the price of Indian IDR was fixed, the trading price of the Standard Chartered Plc share on London Stock Exchange was trading in the range of GBP 15.5.

However, thanks to the stabilization of the global equity markets in the past 2 to 3 trading sessions, the price of the Standard Chartered Plc on London stock exchange has reached to the tune of GBP 16.82 on Thursday closing. Hence, the Indian rupee translation of the trading price in London stock exchange works out to the equivalent price of Rs 1140. As, there is 10:1 exchange rate, the effective equivalent price of Standard Chartered Indian IDR works out to Rs 114.

If one observes, the Standard Chartered IDR issue book is getting built at the lower end of Rs 100.

So, the institutional investors and large HNIs can take this opportunity, by simply applying for IDRs in the Indian public issue; and shorting the share in the London stock exchange. Hence, there is a spread of Rs. 14 (that is, between Rs. 114 and Rs. 100), that is 14%.

This trade is more fascinating, especially, on the back of the fact that recently the listing days from the closure of the issue have been reduced to 12 days from the erstwhile 22 days. So, 14% is the spread available for a trade of just 12 days.

Further, it is appearing that the IPO book will at best get barely subscribed one time. Hence, there is no risk of oversubscription. So, whoever applies is assured of allotment. Hence, as there is no spill-over risk due to oversubscription, this trade can really work well.

It seems there is a clear 14% opportunity in just 12 days for institutions and large HNIs.

Even if we assume that the final issue price will be in line with the Rs 104 per IDR, as applied by the Anchor investors, still there is Rs 10 spread (that is, between Rs 114 and Rs. 104), that is to the tune of about 10%.

The couple of assumptions that need to be highlighted are:

(a) The IDR issue will be able to get closed successfully and will not get called-off; and

(b) The currency risk is properly hedged

Conclusion

As this is the first ever IDR issue in India, the learning curve will be steeper for every one associated in the value chain, regarding the concept and nuances of the modus operandi. As always, the “first mover advantage” can prove to be invaluable.

Thursday, May 27, 2010

Financial Chronicle 27 May 2010

Financial Chronicle 27 May 2010

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Moneylife 27 May 2010 Are weak commodity prices foretelling something

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Moneylife 27 May 2010 Are weak commodity prices foretelling something

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Reuters Khazanah's $835 mln Parkway bid in challenge to Fortis_27 May 2010

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Reuters Khazanah's $835 mln Parkway bid in challenge to Fortis

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The Business Time_Khazanah's $835 mln Parkway bid in challenge to Fortis_27 May 2010

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The Business Time Khazanah's $835 mln Parkway bid in challenge to Fortis

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Wednesday, May 26, 2010

Financial Chronicle 26 May 2010

Financial Chronicle 26 May 2010

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Financial Express 26 May 2010

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FE 26 May 2010

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Reuters 26 May 2010 India's first-ever IDR covered 5 pct

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Reuters 26 May 2010 India's first-ever IDR covered 5 pct

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Tuesday, May 25, 2010

Economic Times 25 May 2010_New issues feel the heat in volatile phase

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Economic Times 25 May 2010

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Mint 25 May 2010_Investors cheer Reliance truce

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Mint 25 May 2010

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Financial Chronicle 25 May 2010

Financial Chronicle 25 May 2010

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Monday, May 24, 2010

Financial Express 24 May 2010 Growth is life, not fighting

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Financial Express 24 May 2010

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Business Line 24 May 2010 Article 2_Stocks to see relief rally in the short term

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Business Line 24 May 2010 Article 2

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Financial Chronicle 24 May 2010_It's raining dividends and it is a deluge in many cases

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Financial Chronicle 24 May 2010

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Financial Chronicle 24 May 2010 Article 2_Ambani truce, F&O expiry to lift market mood

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Financial Chronicle 24 May 2010 Article 2

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Financial Chronicle 24 May 2010 Article 3

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Financial Chronicle 24 May 2010 Article 3

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Financial Express 24 May 2010

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Financial Express 24 May 2010

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Times of India 24 May 2010

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Times of India 24 May 2010

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Business Line 24 May 2010

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Business Line 24 May 2010

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Sunday, May 23, 2010

Forbes 23 May 2010 In India, billionaire brothers end dispute

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Forbes 23 May 2010 In India, billionaire brothers end dispute

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NDTV Profit 23 may ICICI BoR deal signals more m&as in banking sector

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NDTV Profit 23 may ICICI BoR deal signals more m&as in banking sector

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PTI 23 May 2010 Experts see shares of Mukesh, Anil group cos gaining

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PTI 23 May 2010 Experts see shares of Mukesh, Anil group cos gaining

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Reuters 23 may 2010 Ambanis end non-compete pact in reconciliation bid

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Reuters 23 may 2010 Ambanis end non-compete pact in reconciliation bid

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The New York Tmes 23 May 2010 In India, billionaire brothers end dispute

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The New York Tmes 23 May 2010 In India, billionaire brothers end dispute

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Standard Chartered IDR : “Opportunity in Crisis”

Standard Chartered IDR : “Opportunity in Crisis”

The bad market conditions are putting pressure on the ongoing IPO of Standard Chartered IDR. However, if one closely observes, there is some opportunity emerging in the Standard Chartered IDR.

What’s the trade?

When the price of Indian IDR was fixed, the trading price of the Standard Chartered Plc share on London Stock Exchange was trading in the range of GBP 15.5.

If one observes, the Standard Chartered IDR issue book is getting built at the lower end of Rs 100.

It seems there is a clear 14% opportunity in just 12 days for institutions and large HNIs.

The couple of assumptions that need to be highlighted are:

(a) The IDR issue will be able to get closed successfully and will not get called-off; and

(b) The currency risk is properly hedged

Conclusion