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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Jay Rommel who wrote (2316)	8/12/1998 10:32:00 AM
From: Nandu	Read Replies (2) \| Respond to of 12475

I bought GCTY (just 100) at 36 1/8 yesterday. I think I should get out pretty soon. Couldn't get the IPO from E*Trade because of "technical problems". Anyway, all this hoopla about IPOs reminds me of how the primary market works in India. The underwriters set a fixed price (usually Rs. 10 for brand new companies), and a fixed number of shares to be sold to the public. Any member of the public can then apply for the shares, in multiples of 100 share lots. The application is accompanied by cash for the amount you applied for. In case of oversubscription, a kind of lottery system is used to allot the shares. Those who are not allotted the shares are refunded the cash. If the issue is undersubscribed, all applicants are refunded the cash (this rarely happens, since the underwriter will have clout to get institutions to buy up). A scheme was also introduced by which, instead of sending a cash instrument with the application, one can sent a lien one a special kind of fixed deposit in a bank. The investor will thus accrue interest till the shares are allotted, and won't have any hassles in getting refunds. I participated in this only once. Got 100 shares of Satyam Computers for Rs. 10 each in '91. Those shares are now around Rs. 500.