Fairval

Notes on Indian equities, sectors and economy

Merchant Banker Creativity in Hindustan Media IPO

Posted by fairval on July 10, 2010

Merchant Banker Creativity

We all know merchant bankers, like any other broker, don’t have any rights and obligations towards the buyer. Their sole focus is – first, maximising their own benefit, and second, maximising benefit for the seller. Nothing wrong with that, but in IPOs, the regulator SEBI needs to keep its eyes open a little more.

The IPO document in Hindustan Media issue is an exercise in creative presentation of data.  The most important, and obvious table of data, which should have been in the IPO document does not exist. Instead, what is there is the above table. Edel and Kotal are the bankers, clearly two outfits without a backbone.

HMV (Hind Med Ventures) operates solely in regional media. Just what is the share of of regional media in total India advertising? You can go thru the entire document and u wudnt find the answer to this question. Instead what u have is the above table trying to give a positive spin to the small role of regional media in advertising.

Go thru the prospectus, and u realise the HMV issue is just an exercise to raise money. It changes nothing in the way HT Media as a group will operate. Distribution and advertising sales will still be centralised with HT Media. Distribution maybe is ok, but advertising? If it is still centralised, then just what is being achieved by having a separate listed entity? U might as well have raised money in HT Media. Of course, maybe the promoters dont want to dilute their stake too much in the parent.

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