We have an IPO and its not a PSU and its not a Reliance offspring either

When everybody is too busy letting others go and when everybody is too busy rising funds in alternate routes one company has led the way for the rest to follow. I thought that company would be a PSU. But boy was I mistaken. It is Mahindra Holidays which is coming out with an IPO on June 23rd.

The company, that owns Club Mahindra Holidays resorts, plans to sell 9.27 million shares, representing 11 percent of the post-issue paid up capital, it said in an advertisement in The Financial Express.

Bidding will remain open till June 26, it said. (Reuters)

First of all a big round of applause to Mahindra Holidays for this brave move.

Not even big brother Reliance could do it. Reliance Infratel the blue eyed IPO and the darling of investors took a step back from its IPO route. It was the most sought after IPO only a year back. But, it took the private equity route to fund its expansion. A good indication that it is too scared to public.

It is not to say that the companies do not need funds. They need funds to expand. Credit and funds are the blood of a business. But, public listing has lost its charm after Reliance Power’s debacle (And yes it was a debacle. And no the bonus shares did not help). Few pledged shares, few went the QIP route and few went the private equity route. But none went public.

Funds are needed and now we have one more route and in fact the most preferred route back at the top. I can smell a deluge of IPO’s. We should get some smaller issues upfront before some heavyweights like BSNL mops up the money again.

Will we ever be back to the glory days of 2007 where a 40% listing is almost a certainty and getting allotment is not?

PS : A little personal story of mine. Early this year in January I got a call from Club Mahindra and they invited me for a session with a bait of 3-day-2-night package trip. I went in there without any preconceived notions. I spent 4 hours listening to them and with a long discussion with my wife took the plunge subscribed to one of their package offers. It would cost me around 1.5 lakhs. Only after coming back home did I realize that I don’t need it. I canceled my membership and got my refund 30 days after that. Now, I am a happy customer but not of Club Mahindra. Moral of the story is : They have some good salesmen. So it has a very good growth potential.

PPS: A similar offer followed 3 months after Club Mahindra episode but this time from Country Vacations. I went there with my wife and listened for 90 minutes. Only difference is I did not take the bait. They even offered me a plot North of Hyderabad where a 18 hole golf course is coming up. But, I don’t play golf. I rejected it and took the free gift and came back a happy man. Moral of this story : Good decisions comes from good experience and good experience comes from making bad decisions.