There was money left on the Table……….IPO’s

Free Market Economy: You have two choices; Respect it or Abuse it.

For our Leaders, Regulators, Corporates, Investment Bankers and the investing intermediaries, this is a big wake up call. What is happening in our neighbourhood is a big eye opener. Grameenphone, Bangladesh’s biggest mobile firm with over 22 million subscribers is owned by Telenor a Norwegian company and Grameen Telecom a non-profit company founded by Muhammad Yunus a pioneer in microfinance.  On October 4th 2009,Grameenphone opened the largest initial public offering (IPO) in the history of Bangladesh aiming to raise 4.86 billion taka($70 Million) from Bangladeshi’s at home and abroad. Until 18th October the issue was heavily oversubscribed.


No, there were no smart investment bankers who became selling agents.  Nor were there any advertisements creating a hype. Nor was there a grey market premium to attract subscriptions. There was an honest intention to help investors participate in the wealth building process.


True value was offered to the investors. Money was left on the table for the investors. The offer price values the company at only 3.3 times its 2008 earnings before interest, tax, depreciation and amortisation. This looks very cheap compared to Bharti Airtel, India’s biggest mobile phone company, which is valued, over 10 times its EBITDA. The idea was to make the first time shareholders very happy and build trust in the capital markets. The goal was to create an equity cult among the Bangladesh people.


Kudos to Muhammad Yunus the father of micro finance for another feather in his cap. He is a strong brand in Bangladesh and he could have used it to over price the IPO and made a huge profit, but he chose not to do so. Reputation was more important than money. A true, philanthropist, to have priced the offering so attractively priced so that every investor would benefit. This is what true leadership is about. I am sure this is going to change the way Bangladeshi’s invest and it will start a new wave of the equity cult.


India needs such leaders if we wish to achieve a double-digit growth and have a healthy and a vibrant capital market.


  1. Its a classic case of greed by the companies and the QIBs and also first time investors.By listing higher companies want to keep their valuations higher but they loose the aim of growing the company.Latest case is of Euro Multivision .May God give sense to all retail investors and this ‘hype’ mechanism of IPO gets over.

  2. Hey !

    I really find it funny when a Capital Market Participant (Greedy, most of them) lauds OTHERS about how reputation is more important than money and how they work for the betterment of society

    Maybe Brokers/I-Bankers/Merchant Bankers etc can also do the same

  3. Yes Parag. I can only think of Mr Deepak Parekh in India who firmly believes in leaving something for the investor. When mandates to merchant bankers are awarded on the basis of price and an ‘anchor’ investor has a long term horizon of ’30’ looonnng days, what hope is there for the Indian investor? In any IPO, there is a buyer (the investor-sucker) and the seller (the promoter). What is good for the seller, is generally bad for the buyer.
    Cheers. Best regards

  4. Yes it is true that Indian needs atleast one Mohammed Yunus. This is a strange country where even the government does not want to leave any thing to the common man, where even IPOs from the PSU’s are priced such a manner that the gullible small investor is made loose his or her hard earned money.

    Hope we also are going to have good days, as the potential and the improtance of Micro finance is being realised world wide.


  5. I find it very strange that most people consider that an IPO should be an act of charity for the so called ‘common man’. Please do realize that an IPO is nothing but a sale of a portion of the company by the existing owners (sellers) to the new owners (buyers). Hence, its quite obvious that just like any seller, they would like to sell at the highest price possible. Its the same as a house owner or a car owner trying to sell his house or car to a buyer. Obviously the seller will always try to sell his property at the highest price he can get.

    Sale of a portion of a company (IPO), just like sale of a house, car, etc, is not meant to be an act of Charity to the buyer.

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