I wrote about this earlier, now repeating it after SEBI has cracked the whip.

Rarely do I say nice things about the regulator, let today be one of those days.

Icici Pru Amc in its wisdom thought that Icici securities OFS was a good investment opportunity. This is funny. I can imagine Ms. Chanda Kochhar telling her team “We need to sell some of our shares to raise money, we need about Rs. 6000 crores find something to sell”.

Their Investment person would have suggested OFS of Icici Securities. Say 100 Crore shares at a price of Rs. 600. She would have of course suggested asking the CIO and CEO of Icici Pru Amc about the size of the issue.

They would have said Aye! Aye! Madam, it is a great time to SELL – every Indian is buying Mutual funds. You know, Mutual Funds sahi hai?

So NaMo was selling his shares, and CK was selling her shares. Perhaps advised by the team managing the maximum money – the biggest Mutual fund.

Then you come home.

Then you sit in a meeting in the amc office.

You need to buy something. So the amc decides to buy Bharat 22 ETF in its schemes. And of course, Icici Securities.

Excellent decision. A good buy for Amc, and a good sell for the bank. Bharat 22 ETF a good sell for the govt and a good buy for the Amc.

So I Pru bids Rs. 400 crores in the issue. You see the IPO has by now been reduced to 77,249,508 shares at 520.

CK story breaks out.

I sec + I pru amc SURELY HAVE THE BRAINS to postpone the issue. Its an OFS dammit. There was no tearing hurry.

Who in his sane mind would do an over-priced OFS when shit is hitting the roof? (like a friend working with one of the regulators says OFS means over-priced offer of shares).

I am sure CK said “I am the captain…Full steam ahead boys”. Remember Titanic? Exactly how you hit the iceberg.

Market refused to bow the wishes of the Iron lady. Issue bombed (to use a mild word). It is well nigh IMPOSSIBLE for an issue sized Rs. 5000 crore from ICICI to fail in a reasonable bull market. But yes, the ship was about to hit the iceberg. Captain said Go ahead, I can see clearly, we are a big ship. Too big to be worried about ice-bergs.

On the last day I Sec needed another Rs. 250 crores to pull the issue through. Well the fund house obliged. In its wisdom it had invested Rs. 400 crores. Now another 240 more.

In terms of genuine applications, this must have been about 33% of the issue – I am guessing of course.

This is hitting the ice-berg twice. If such a thing was possible. This was of course “good judgement”.

SEBI saw red. It has asked I Pru Amc to refund the Rs. 240 crores to the unit holders. Good move SEBI.

A great move by SEBI would have been to scrap the issue.

The issue was over-priced. It should have been an issue of 50,00,00, 000 shares at Rs. 250 each. Not a buck more.

Of course this is in hindsight that I am writing. However if you have been following me on twitter I have said I-Sec would be a good buy at Rs. 260.

By the way Prudential had paid the life insurance claims of the 300 odd people killed in the Titanic ship wreck. History rhymes.

https://www.bloombergquint.com/business/2018/07/02/icici-securities-ipo-sebi-asks-icici-prudential-mutual-fund-to-return-investors-money-to-schemes 

It is so funny that IRDA was busy amending its rules to help another promoter misuse policy holder money to bail out another organization.

When will I hear a news item saying “Regulator says …..Company is over exposed to ….shares and sane, prudent, investment norms are being violated”. I am sure you understand that I am talking about the Idbi bail out.

By the way will heads roll in Icici Pru Amc? You mean the trustees will get away with this? what about the employees?

BTW when is the Icici Prudential Amc’s OFS? AND who will bail it out?