WTF ! JUST DON’T DIAL !
That’s My First Take on the ‘Just Dial’ IPO !
How can SEBI,Exchanges,MOF,Company Law Board even allow this IPO of just under Rs 1000 crs ! ~ there are no real Objects to the Issue as it is fully an Offer For Sale by Existing and Part Exiting Promoters and PE Shareholders and the Company does not get any IPO Money
If you do subscribe in the IPO you’ll make these Existing and Part Exiting Promoters & Other PE Shareholders more very very very filthy rich in no time and making yourself poor in time to come !
The Just Dial IPO opens on May 20,2013 in the book building band of Rs 470 to Rs 543 for a FV Rs 10 share ~ Shares on Offer for Sale by 9 Shareholders total 17497458 with 75% amounting to 13123095 shares reserved for QIB Portion (normally it is 50%) ~ At top band Price of Rs 543 the Issue Size is Rs 950 crs with all the Monies going to the selling shareholders that include three Promoters,V S S Mani,Ramani Iyer and V Krishnan and 6 Funds that include Sequoia III,SAIF,Tiger Global Four JD Holdings,Tiger Global Five Indian Holdings ,EGCS and SAPV ~ All are Part Exits except for EGCS who exits in full
Plan to write a detailed note on this Obscene IPO but be forewarned now with these few details and perspectives
Am stunned simply at the gaul and audacity of the Company guided by it’s Lead Issue Managers Citigroup Global & Morgan Stanley to come out with such an overvalued IPO that is totally an Offer for Sale providing part Exit to Promoters and some PE Players !
SEQUOIA’s Role Play as an Illustration
SEQUOIA III (Yes,it also holds shares as Sequoia I and II) ,for example at the top band price of Rs 543,will make an obscene 836% Return inside four years on it’s initial Investment in July 2009 at an average Price of Rs 58 a share after adjusting for a crazy 55: 1 Bonus in 2010 ! ~ even this Initial Investment of Rs 38.35 Crs was a Transfer of 118014 Shares on July 21,2009 from another Shareholder Clearmist Ltd at Rs 3250/share The Liberal Bonus 55:1 on April 24,2010 took the holding to 6608784 shares ~ Of this they are offering 3207934 shares in this IPO and would stand to get Rs 174 crs at Rs 543 and yet be left with 3400850 shares !
I mean they came in at Rs 50+ and want us to come in at Rs 500+ through their shares ! Whoa ! ~ all for a Company that they just pumped in Rs 250 crs again in
Promoters exiting make even more ! as their holding cost is between Nil to just 64 paise per share !
Sequoia significantly lifts Just Dial Networth in July 2012
Just Dial’s Networth was just over Rs 100 crs on March 31,2012 ~ It rose dramatically to over Rs 400 crs on December 31,2012 ! because Sequoia I & II each invested Rs 125.50 crs aggregating Rs 251 crs by subscribing for 2568243 shares each at Rs 488.66/share on July 21,2012 ~ Also a fortnight later on August 8,2012 both picked up shares from the Promoters and other shareholders at the same Price of Rs 488.66/share
So one can view it this way that Sequoia I & II Investment of Rs 251 crs directly in the Company less than a year ago on July 21,2012 will be returned to the extent of Rs 174 crs to Sequoia III in this Offer for Sale IPO !
Sequoia I,II and III currently hold an aggregate of 12842546 shares in Just Dial at an aggregate Investment of @ Rs 343 crs averaging Rs 267/share ~ Sequoia III is offering 3207934 shares in the IPO ~ At top band Rs 543 it will receive Rs 174 crs ~ Post IPO it will then hold 9634612 shares at Net Investment of Rs 169 crs or Rs 175 per share
Interestingly in Q2 FY 12 the US Operations of Just Dial under Just Dial Global Pvt Ltd were demerged ~ The US Company is owned by the Promoters in their Personal Capacity alongwith Sequoia
Don’t Get Carried Away by…..
- And don’t get carried away with Crisil giving a top 5 on 5 IPO grading ! ~ IPO Grading has simply no connection to the IPO Pricing which is over 50 Earnings Multiples and over 9 Book !
On February 6, 2013 I blogged on this too
Wednesday, February 6th, 2013
- Dont get comfortable by even the Safety Net that is now mandatory for Retail Segment upto a certain period and number of shares per allotee ~ this is restricted to a 180 days time period from date of Listing and the Safety Net Trigger Price will be the volume weighted 60 days trading price from the relevant date which is 60 days before close of the 180 days period.If such a Price falls below the IPO Price then a Tender Offer will be enforced for Eligible Retail Allottees and their Eligible Shares,both defined in detail in the Prospectus ~ Only 10% Retail Reservation is there in the IPO and my guestimate is that the liability if any of the three main promoters who are providing this Safety Net will not exceed Rs 25 crs ! ~ probably much less
- And dont say Wow ! just because Amitabh Bachchan holds 62794 Shares which at Rs 543 Top Band Price are worth Rs 3.4 crs ! ~ this Celebrity is Just Dial’s Face in their Media Advertsing Blitz and probably this Shareholding represents being paid for in part or full by Shares….probably….wonder at what price!?
Don’t Fall for Such Plays Again & Again….
I smell a Stink here !~ A Premeditated Plan in Operation for the past three to four years whose success depends on us having poor memories and therefore becoming suckers and of course the existence of friendly QIBs in an Obscene IPO Exit ~ I,actually we all have, seen such ‘passing the parcel’ playouts before with PE Investments coming in and Liberal Bonus Issues being splashed before the IPO Exit at an Obscene Price at buoyant Sensex Levels of 20000 yet again ! ~ Don’t fall for such Plays again and again
If you see the Just Dial Capital Construction and Build Up of Shareholder Holdings you’ll be intrigued by Purchases and Sales and Buy Backs and Liberal 55: 1 Bonus in 2010 and Capital Reduction and Gifting and Optionally Convertible Preference Shares and Preference Shares A,B & C Series and…..Phew ! ~ for instance Main Promoter V.S .S Mani (can be pronounced as Money!) has purchases shares in 2006 from SBI ‘s Magnum Fund,Morgan Stanley Emerging Market Funds etc at Rs 440/share and in December of the same year 2006 has sold shares back to his own Company in a buy back at Rs 2574/share and two months later in February 2007 sold some more at Rs 2651/share to his own Company in another buy back !
~ worse than even Suzlon Pre IPO cornering manipulation by FIIs and Overseas PEs,one of who is also a Lead Manager to the Just Dial IPO
~ worse than even the SKS Microfinance IPO that I thrammed in July 2010 ~ Sequoia was offering for Sale in this Issue too ~ Just a Coincidence or have these guys mastered a Brazen Plan to repeat it again and again !? ~ and I was bloody right in SKS !
I have an Issue…actually several…..with the SKS Microfinance Issue !….Intentions may be Noble but Actions are Profit Motivated and not singularly Selfless !
Thursday, July 29th, 2010
Of course the unholy nexus will ensure the Just Dial IPO is successful ~ Am sure you guys out there are smart enough to know how ! as some friendly QIBs (75% of the Offer is reserved for them) will enter in this obscene higher IPO Band !
Rational !? ~ who in their Right Mind would subscribe in the Just Dial IPO in this Price Band !?
A Raging Question that continues to Rage my Mind through years ~ Who will bell this ‘Substance over Form’ Equity Cat ~ SEBI,CRISIL,Stock Exchanges,Ministry of Finance,Ministry of Corporate Affairs? ~ because the Form may have been complied with for SEBI to have cleared it for an IPO and the Exchanges to have cleared it for listing ~ but what about the IPO Substance ! ~ because this is what influences,impacts,affects and makes or breaks Primary Market Investors
And Government and SEBI wants Retail and Small Investors to come back to Equity ! ~ Why !? ~ so that they become suckers again in Obscene IPOs ! ~ after all there has to be buying by the Masses for Insider Classes to make obscene Monies on selling !
Watch out for some more as I scan the Prospectus even more vigorously……
Update on May 18,2013
Check this more detailed Note posted on my company website
We have not given it an ‘Apply’ Staus and rather have adviced ‘Just Don’t Dial’ on two broad concerns of
- Corporate Governance Issues and if one wants to move past these then
- High Valuations in the IPO Pricing increases the Investment Risk Considerably
Even Google at US $ 910 and a Market Cap of over US $ 300 Billion offers a Trailing P/E of 27 and a Book of under 4
Just Dial at Rs 543 is at 60 Earnings and 9 Book Multiples and will yet be under Market Cap of Rs 4000 crs and a Billion dollars
😀 And Yes Amitabh Bachchan got his Shares in 2011 at just par Rs 10,probably in lieu of his promoting Just Dial in the Media and being it’s Face
There will be other Less Riskier Investment Opportunities in the future….unless of course you are a prankster who just dials blindly to talk mischievously to anyone who answers ~ just remember this prank costs high at Rs 470-Rs 543!