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Merchant banking


Merchant Banking (Software Companies)

Merchant Banking (Software Companies)

Published in Business , Economy & Finance
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  • 1. Company BackgroundInfinite Computer Solutions is a global service provider of InfrastructureManagement Services, Intellectual Property (IP) Leveraged Solutions, and ITServices, focused on the Telecom, Media, Technology, Manufacturing,Power and Healthcare industries. Infinite Computer services span fromApplication Management Outsourcing, Packaged Application Services,Independent Validation and Verification, Product Development and Support,to higher value-added offerings including Managed Platform and ProductEngineering Services.Infinite Computers major customers includes Verizon, IBM, ACS, GE andAOL. Company have 14 offices across the globe, including offices in multiplelocations in the US, UK, India, China, Malaysia, Singapore and Australia.Infinite is one of the leading providers of telecom- specific offerings to serviceproviders, OEMs and ISVs in the Telecom vertical, globally. For fiscal year2008-09, the telecom vertical contributed to 59.4% of their total revenues.Objects of the IssueIt’s a new issue.The objects of the Issue are to achieve the benefits of listingon the Stock Exchanges & to raise capital to:1. Capital Expenditure;2. Acquisitions;3. Repayment of Debt;4. General Corporate Purposes;5. Issue Related Expenses.Issue Price Announcement DateAt the time of filing RHP
  • 2. Issue Details• Issue Open: Jan 11, 2010 - Jan 13, 2010• Issue Type: 100% Book Built Issue IPO• Issue Size: 11,503,000 Equity Shares of Rs. 10• Issue Size: Rs. 189.80 Crore• Face Value: Rs. 10 Per Equity Share• Issue Price: Rs. 155 - Rs. 165 Per Equity Share• Market Lot: 40 Shares• Minimum Order Quantity: 40 Shares• Listing At: BSE, NSEMerchant Banker/Lead Manager• India Infoline Limited• Spa Merchant Bankers LtdBankers to the Issue• ICICI Bank Limited• HDFC Bank Limited• The Hongkong and Shanghai Banking Corporation LimitedRegistrar of the IssueBigshare Services Pvt. LtdUnderwriters• SPA Merchant Bankers Limited• India Infoline Limited• Avendus Capital Private Limited
  • 3. • SPA Securities Limited• Reliance Securities LimitedIPO Grading Agency• CRISIL Limited• IPO Grade 2Risks• We are party to certain legal proceedings that, if decided against us,could have an adverse effect on our financial condition and results ofoperations.• Our funding requirements and the deployment of the proceeds of theIssue are based on management estimates and have not beenindependently appraised• We have not entered into any definitive agreements to utilize theproceeds of the Issue• There has been delay in implementation of the proposed projects forwhich funds are proposed to be raised through this Issue. This hasresulted in increase in cost of our proposed capital expenditure. Anyfurther delay is subject to risk of cost and time overrun• We have a number of contingent liabilities, and our profitability couldbe adversely affected if any of these contingent liabilities materializes• For the development of certain products, we may be using certainessential intellectual property for which we may not have obtainedprior permission.• We could face currency exchange risks as a significant percentage ofour revenues are denominated in U.S. Dollars and other currencies• Tightening immigration policies across the western world especially inthe United States during the election year and Europe’s preference forEU origin workforce could hamper our future efforts to grow in thesekey markets
  • 4. • Risk of Force Majeure, Political and Economic risks involving India• The market value of the Equity Shares may fluctuate due to thevolatility of the securities marketsBook Building DataNumber of Times Issue is Subscribed (BSE + NSE)QualifiedInstitutional Buyers(QIBs)NonInstitutionalInvestorsRetailIndividualInvestors(RIIs) TotalShares Offered / Reserved 4,026,050 1,725,450 4,026,050 9,777,550Day 1 - Jan 11, 2010 17:00IST 0.8162 0.0000 0.1806 0.4104Day 2 - Jan 12, 2010 17:00IST 2.7773 8.3487 0.7635 2.9313Day 3 - Jan 13, 2010 17:00IST 48.4435 106.0171 11.0781 43.2200Category of InvestorsListing Day Trading InformationBSE• Listing Date: Wednesday, February 03, 2010• Issue Price: Rs. 165.00• Open: Rs. 178.35• Low: Rs. 178.35• High: Rs. 205.80
  • 5. • Last Trade: Rs. 191.60• Volume: 16,382,299NSE• Issue Price: Rs. 165.00• Open: Rs. 170.00• Low: Rs. 170.00• High: Rs. 206.00• Last Trade: Rs. 191.80• Volume: 24,435,160MFs invested in this companyScheme % of asset size• Principal Services Industries Fund - Growth 2.23• Principal Services Industries Fund - Dividend 2.23• Principal Resurgent India Equity Fund - Growth 1.35• Principal Resurgent India Equity Fund - Dividend 1.35• Principal Tax Savings Fund - Dividend 1.34List of Anchor Investors• T Rowe Price International Inc. A/c T Rowe Price InternationalDiscovery Fund - 303000• Carlson Fund – India - 303000• Lloyd George Investment Management (Bermuda) Ltd A/c – LG IndiaFund - 181920• Lloyd George Investment Management (Bermuda) Ltd A/c – LG IndiaPlus Fund - 121330• Alden Global (Mauritius) Limited - 60250• Credit Suisse (Singapore) Limited - 120500• BATSPL A/c Bharti Axa Equity Fund - 60600
  • 6. • Reliance Capital Trustee Co. Ltd. A/c Reliance Regular Savings Fund-Bal option - 514600• Citigroup Global Markets Mauritius Private Limited – 60250Standard DeviationCumulative Month Standard DeviationFeb 5.083945318Feb - March 7.421035755Feb - April 10.61402765Feb - May 15.22239254Feb - June 15.69639824Feb - July 14.9939065Monthly ReturnsMonths Monthly ReturnFeb 30.5Mar 32.75Apr 31.3May 49.4June 15.25July 17.8
  • 7. Company BackgroundIncorporated in 1996, Intrasoft Technologies Limited provides electronicgreeting card services through website, is the largest electronic greeting cards website in India and 2ndlargest in the world.123greetings has range of over 20,000 electronic greeting cards designed tocater to varying geographical and religious celebrations, occasions and otherevents.Company has a team consisting of 16 creative professionals who develop in-house content including artistic, photographic and musical content for itselectronic greeting cards.Company doesnt charge its users for accessing and sending electronicgreetings and derive its revenues almost entirely from online advertisingrevenues and software development services.Objects of the Issue1. Branding and Promotion;2. Purchasing a corporate office at Kolkata;3. Investment in technology infrastructure;4. General corporate purposes;5. Issue related expenses; and6. Achieve the benefits of listing on the Stock Exchanges.Issue Price Announcement Date2 Days before the Issue
  • 8. Issue Details• Issue Open: Mar 23, 2010 - Mar 26, 2010• Issue Type: 100% Book Built Issue IPO• Issue Size: 3,700,000 Equity Shares of Rs. 10• Issue Size: Rs. 53.65 Crore• Face Value: Rs. 10 Per Equity Share• Issue Price: Rs. 137 - Rs. 145 Per Equity Share• Market Lot: 40 Shares• Minimum Order Quantity: 40 Shares• Listing At: BSEMerchant Banker/Lead Manager• Anand Rathi Securities Limited• Collins Stewart Inga Private LimitedBankers to the Issue• HDFC Bank Limited• IndusInd Bank LimitedRegistrar of the IssueLink Intime India Private LtdIPO Grading Agency• CARE• IPO Grade 3Risks• Our revenues are difficult to predict and do not arise from our usersdirectly. This may adversely affect our Company’s business, financialcondition and results of operations
  • 9. • Our Company has not entered into any definitive agreements to usethe Net Proceeds of the Issue and there can be no assurance that ourCompany will be able to enter into such agreements on termsfavourable to us or at all• Our Company’s revenues are highly dependent on overseas usersand advertisers. Economic slowdowns and other factors that affect theeconomic health of their respective economies may affect ourbusiness• Our services are technology driven and any breakdown of ourtechnical systems or any third party system failures and internetdisruptions could adversely impact our business• Our Subsidiary and our Company are involved in certain legalproceedings. The value of the claims in the these proceedings cannotbe ascertained or quantified and if these are adversely determinedagainst us, it may affect our business and reputation• There are no standard valuation methodologies or accountingpractices in the emerging internet and internetrelated industries• Changes in rules promulgated by the SEBI, the various stockexchanges and the changes on the interpretation and enforcement ofexisting law and rules relating to the stock markets or investment insecurities may adversely impact our business• Terrorist attacks and other acts of violence or war involving India, theUnited States, and other countries could adversely affect the financialmarkets, result in loss of advertiser confidence, and adversely affectour Company’s business, results of operations and financial condition• Changes in the Indian Government’s economic and industrial policies,statutory rules and regulations relating to economic, industrial orlabour affairs or the political situation in India could adversely affectour business
  • 10. Book Building DetailsNumber of Times Issue is Subscribed (BSE + NSE)QualifiedInstitutionalBuyers(QIBs)NonInstitutionalInvestorsRetailIndividualInvestors (RIIs) TotalShares Offered /Reserved 1,850,000 555,000 1,295,000 3,700,000Day 1 - Mar 23, 201017:00 IST 0.8895 0.7206 0.0482 0.5700Day 2 - Mar 25, 201017:00 IST 1.6858 1.2184 0.3516 1.1500Day 3 - Mar 26, 201018:00 IST 21.9673 21.6048 13.5080 18.9500Category of InvestorsListing Day Trading InformationBSE• Listing Date: Monday, April 12, 2010• Issue Price: Rs. 145.00• Open: Rs. 140.00• Low: Rs. 123.30• High: Rs. 167.15• Last Trade: Rs. 159.35• Volume: 16,800,481MFs invested in this companyScheme % of asset size
  • 11. • Franklin Infotech Fund - Growth 0.15• Franklin Infotech Fund - Dividend 0.15No Anchor InvestorsStandard DeviationCumulative Month Standard DeviationApril 12.35207862April - May 11.94377574April - June 10.08378307April - July 8.899816687Monthly ReturnMonths Monthly ReturnApr 54.05May 32.3June 20.95July 11.7
  • 12. There are mainly four credit rating agencies in India viz:-• CRISIL ( Credit Rating Information Services of India Limited )• CARE ( Credit analysis and research limited )• ICRA ( Investment information & credit rating agency of India limited )• FITCH India rating agency.The ‘grading’ is given in an overall assessment of fundamentals on five pointscale from grade 5 to grade 1. These grades are explained as:-• IPO grade 1: poor performance.• IPO grade 2: Below average fundamentals.• IPO grade 3: Average Fundamentals.• IPO grade 4: Above strong fundamentals.• IPO grade 5: strong fundamentals.Benefits of IPO Grading• Professional and independent appraisal – IPO grading will createawareness about the fundamentals of the company’s IPO and willprovide focused company information as a key input to the prospectiveinvestors that will be helpful in taking an investment decision.• Removal of information burden – when disclosures of issues arelarge and complex, the grading process can make it quickly cuttingthrough the clutter. Thus, IPO grading will particularly be helpful for thesmall investors as it will serve as a guide for them of the new companycoming out with the issue.• Impediment for weak companies – companies which arefundamentally not very strong will be impeded in building speculativedemand among investors, such weak companies will need to offer
  • 13. pricing, which will adequately compensate investor’s risk.IPO gradingprovides disincentives for weak companies to come to the market foreasy finance.• Improved investors sophistication - It can help an investor inmaking his mind as CRAs do not force an investor to buy but itprovides scientific reasons for the investor to take a concrete decisionbased on the IPO grading.Conditions in which IPO grading doesnt work• The IPO grades given are from 1 to 5.if the investor wants to invest ina two companies and both the companies gives the same return, he isconfused and he takes the help of IPO grading to find out that both thecompanies are having a same grade (e.g. IPO grade 5). Then how willthe investor decide on which IPO to invest for, the grading cannot helphim in making is mind. So the IPO grading may sometimes fail toconvince the investor and it is the investor’s final call on decision tochoose between the two investments. This condition is an exception toIPOS grading.• IPO grading for an issuing company as it gives better command onpremium for their new issues. But this merit of company may turnharmful for the investors as an issuing company with a good IPOgrade can ask for a higher rate of premium which the investors areforced to pay if they are looking for a better investment option. In thisway an issuing company which has a good IPO grade can exploit theinvestors through higher rate of premium on their shares.