RBI allows FIIs to hedge investments under ASBA route

The initiative is likely to facilitate FII investments under the ASBA route into equity market

The Reserve Bank on India (RBI) on 21st May has allowed foreign institutional investors (FIIs) to hedge foreign currency risks arising out of investment in IPOs made through ASBA route.

“Initial public offers (IPO) related transient capital flows under the application supported by blocked amount (ASBA) mechanism, foreign currency-rupee swaps may be permitted to the FIIs,” the RBI said.

Foreign currency rupee swaps for hedging flows under ASBA, RBI said, will be available for 30 days only.

The initiative is likely to facilitate FII investments under the ASBA route into equity market.

Under the ASBA facility, the application money of investors remains blocked in his bank account until the process of allotment of shares is completed.

The Securities and Exchange Board of India (Sebi) had introduced ASBA facility for public offers first in September 2008 when retail investors were allowed to use it.

The facility eliminates any delays related to refunds for the unallocated shares. Initially, it was offered to retail investors only and was given to other investors in 2009.

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Sanghvi Forging debuts at over 3% premium on NSE

On the Bombay Stock Exchange, Sanghvi Forging debuted at Rs85 and was later quoting at Rs90.10

Shares of Sanghvi Forging & Engineering got listed on the National Stock Exchange (NSE) today at a premium of over 3% vis-a-vis their issue price of Rs85 apiece.

Shares of the company opened at Rs88 apiece, reflecting a jump of 3.52% over the issue price on NSE. Later, the stock was trading at Rs89.90 apiece, up 5.76% from the issue price.

On the Bombay Stock Exchange, the scrip debuted at Rs85 and was later quoting at Rs90.10.

In terms of volume, over one crore shares of the company changed hands on the bourses in early trade.

The company had entered the capital market through a Rs36.9 crore initial public offer with a price band of Rs80-Rs85 a share.

The firm intends to utilise the issue proceeds for partly financing the cost of setting up a 15,000-mtpa open die forging unit (with single piece forging up to 40 mt) to manufacture proof-machined products such as stepped shafts, bars and hollows, blocks, flanged shafts, gear blanks and forging items.

The company is a manufacturer and exporter of forging products for the non-automotive sector.

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6 BSE-listed firms give up to -70% returns in FY12

All the six companies, including Muthoot Finance and Future Ventures India, which hit the secondary market in FY12, are attracting negative returns in the range of 10-70%

As many as six companies that made their debut on BSE (Bombay Stock Exchange) in the current fiscal are trading well below their issue price, resulting in significant negative returns for the investors.

According to an analysis based on data available with the BSE, all the six companies, including gold financing firm Muthoot Finance and Kishore Biyani’s Future Ventures India, which hit the secondary market in FY12 are attracting negative returns in the range of 10-70%.

Market analysts are of the view that the companies listed during the current financial year are trading way below their issue price because of aggressive pricing issue.

“After getting listed on the bourses, many companies are unable to sustain their issue price levels, because of aggressive pricing,” CNI Research Head Kishor Ostwal said.

He further said, “prices are not set right.”

Among the initial public offers (IPO) listed during the current financial year, Shilpi Cable Technologies attracted maximum negative returns to investors as it is down by 70% over its issue price of Rs69, followed by Servalakshmi Paper which plunged 54% from its issue price of Rs29.

Further, Innoventive Industries shed 26.28% vis-a-vis issue price of Rs117, Paramount Printpackaging tumbled 19.42% from its issue price of Rs35, Future Venture India is down 17.5% from its issue price of Rs10 and Muthoot Finance is down 9.6% over its issue price of Rs175.

Interestingly, IPO of speciality chemical maker Galaxy Surfactants was withdrawn by its promoter because of poor response.

While, capital markets regulator Sebi has withheld the listing of sponge iron producer Vaswani Industries IPO after it received complaints regarding irregularities in subscription.

Earlier this year, companies such as PTC India Financial Services, Acropetal Technologies and Omkar Speciality Chemicals which made their debut on the bourse are also giving negative returns.

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