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May 5, 2010We only eat meat in our dreams and possibly on holidays – Income Disparity in Egypt
May 6, 2010The Indian stock market has been hit with low quality offerings over the recent past with improvement in the general market conditions.I was wondering whether the advent of such issues was a sign of a market top.Looks like it might have been with this IPO Failure and the European Debt troubles. “Tara Health Foods” failed to get subscribed despite extending the time and lowering the price.The news report says that persons close to the company cite bad market conditions as reasons for the failure , I think that it is more likely the quality of the issue was the major reason for the failure.Decent quality at a reasonable price is able to find buyers in big numbers like Persistent Systems,IL&FS and SJVN.But Low Quality unlike the heady 2008 days is finding it hard to find buyers . A lot of the low quality IPOs are scraping with one-two times subscription and falling like a rock after listing. No doubt the subscription numbers are made from some investors who are attracted by more than just the fundamentals of the stock.
Tara Health Foods withdraws IPO after poor response – Business Standard
The initial public offer (IPO) of Tara Health Foods has been withdrawn, as poor investor response saw the institutional portion remaining under-subscribed till the closure of the issue on Wednesday. The issue failed to generate investor interest even after the bidding period was extended with a reduced price band.
In 2008, only two issues were withdrawn, those of Emaar MGF and Wockhardt Hospitals.
More important, the portion reserved for qualified institutional buyers (QIBs) received bids for only 1.75 million shares, as against 3.5 million shares on offer. Since the company came out with a public issue, under Sebi Regulation 26(2), the offering had to be withdrawn if at least 50 per cent of the issue was not subscribed by QIBs. An entity which was part of the IPO attributed the issue’s failure to increased “uncertainty in global markets and the weak response”.