The follow-on public offer (FPO) of ICICI Bank Ltd. offers visible upsides to retail investors on listing even if the stock price on listing remains the same as the offer price. Existing shareholders (below Rs. 1 lakh share value as on record date) can also apply in the reservation as well as retail segment…
Scenario 1
Consider a scenario where the offer/issue price is Rs. 900 and the listing price is the same (Rs. 900)…
Due to the 5% discount, retail investors will get the shares at Rs. 855
They will pay Rs. 500 (paid up value) (Rs. 250 on application; Rs. 250 on allotment
The unpaid value will be Rs. 355
The partly paid shares will be traded at a price equivalent to the market price of fully paid share less calls in arrears; ie., Rs. 900 - Rs. 355= Rs. 545
Rs. 545 is the listing price of the partly paid share
The investor gains Rs. 545 - Rs. 500= Rs. 45
Considering the partly paid investment of Rs. 500, the investor’s gain is 9%
i.e. Rs. 45/500 X 100= 9%
Considering the gain of Rs. 45, the investor gets a benefit of approximately 13% in the unpaid value that he has to pay later (Rs. 355)…i.e., 45/355 X 100= 13%
Scenario 2
Consider a scenario where the offer/issue price is Rs. 900 and the listing price is the higher (Rs. 925)…
Due to the 5% discount, retail investors will get the shares at Rs. 855
They will pay Rs. 500 (paid up value) (Rs. 250 on application; Rs. 250 on allotment
The unpaid value will be Rs. 425
The partly paid shares will be traded at a price equivalent to the market price of fully paid share less calls in arrears; ie., Rs. 925 - Rs. 355= Rs. 570
Rs. 570 is the listing price of the partly paid share
The investor gains Rs. 570 - Rs. 500= Rs. 70
Considering the partly paid investment of Rs. 500, the investor’s gain is 14%
i.e. Rs. 70/500 X 100= 14%
Considering the gain of Rs. 70, the investor gets a benefit of approximately 20% in the unpaid value that he has to pay later (Rs. 355)…i.e., 70/355 X 100= 20%
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