Comment on The IPO Markets - Part 1

Bhaskar commented on 14 Aug 2017, 02:18 AM

Hi Karthik,

It is very good initiative/commendable job, i came across this very late after 3 years, but very useful and gives almost complete insight of Markets. this really fills the void of Knowledge sharing of Markets and Equity Analysis in a broad prospective. Thanks to you and your team for this.

1) I have a simple doubt.

Based on previous discussion on the cited example, if during nascent stage of business,
Promoter invests 4 cr
Angel 1 invests 50 lakhs
Angel 2 invests 50 lakhs

and during authorization (100%) and issue (50%) of shares,

if promoter keeps only 40%- 2 Cr (less compared to his share of investment)and 5 (50 Lacs) each by Angels, remaining 50% were in the companies name (virtually the investment by promoter only.)

But after all cases, and after IPO and listing,

if the value increases 80 times to 400 crores ( 5th SHP Table) and as the promoter had not issued 50% share of him to him initially before the sale of stake to VC & PE, will it be loss ( increased valuation of non issued initial shares now goes to company capital only but not to promoters stake) to him for remaining 50%?

At a later stage (like the case of infosys), initial promoter goes out with selling of major part of thiers, then will it be a loss for him ( as the risk and take off of business idea and hardwork behind growth is by him majorly) ?

In this perspective, initially, is it better to issue all the remaining authorized shares to him or decide some percentage (40% as mentioned by you ).? Please clarify?

2) Typographical error in 5th SHP Table for PE-C No of shares are 750000 a sper 15% for 5000000 total authorized shares. and Total number of shares is 42 crores for 84% of total Value of 336 Cr.

From Bhaskar

View the full comment thread »