X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Anybody for 'Instant Offer for sale'? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jul 23, 2013

    Anybody for 'Instant Offer for sale'?

    You may love instant coffee. But trust us, the latest fad of instant offers for sale of shares can leave a bad taste in the mouth of any serious investor! As if initial public offers (IPOs) have not had their share of destruction of investor wealth. The instant 'offer for sale (OFS)', manage to go a step ahead and lure gullible investors at short notice! The reason we are calling them instant OFS is because the investor is supposed to do several things within a span of less than 14 hours! And we thought only the Rapid Traders in Wall Street have the knack of doing so!

    Well, the trend of these short notice OFS has been started by none other than the government. In the hope of getting quick fix solution to its disinvestment problem, the government started offering shares of PSUs through these offers. The catch was that the offer would be open for a single trading session. Now, since the offer for sale of shares is on listed companies, we understand that there is no need for 'price discovery' unlike in the case of IPOs. Hence even a single trading session is sufficient for investors to act. But should they act without informed decision making?

    In several cases, the decision of going ahead with the offer, the date and the pricing of the offer is publicly announced just hours ahead of the start of the session. The pricing of the offer, in particular, is announced barely 12 to 14 hours before the start of the trading session. For investors not well versed with the business, the decision to participate or not in the offer for sale can be a hasty and tricky one.

    The spate of OFS increased in recent months with SEBI mandating 25% public shareholding in listed firms. The government itself has come out with offer for sale in several large and small public undertakings, both for disinvestment and hiking public shareholding purposes.

    Why is the regulator sleeping?

    As against the BSE's guidelines to inform stock exchanges about the details of offer for sale at least 24 hours prior to the issue, not just the government but other promoters have willfully delayed the releases. The result being that prospective investors are grossly short of time to do their homework before investing in the stocks. The regulator, meanwhile, seems to be blissfully ignorant about the breach of guidelines. The excuse put forth by the companies of pricing the issue after the end of previous trading session is a rather lame one we believe.

    What should investors do?

    Even for companies that investors are well aware of, an investment decision without taking cognizance of valuations is fraught with risk. The valuations have to be evaluated not just with respect to past performance but also in light of the changes in economic and business dynamics. Hence, as in the case of every other stock, investors should consider only those OFS that allow them reasonable time to take informed decisions. They would rather be safe staying away from such instant offers than be sorry about a wrong decision.

      Tanushree Banerjee (Research Analyst), is the editor of ValuePro, The India Letter, and Stock Select, Equitymaster's oldest recommendation service. She is also the editor of Equitymaster's most popular newsletter read by over 200,000 subscribers, The 5 Minute WrapUp. Tanushree started her career at Equitymaster covering the banking and financial sector stocks along with scrutinizing the RBI policies. And over the last decade, developed our research processes that have helped us pick out various multibaggers, across all sectors. A firm believer of "safety first" when it comes to investing, Tanushree closely follows the investing philosophies of Warren Buffett, Jeremy Grantham and Joel Greenblatt.

     

     

    Equitymaster requests your view! Post a comment on "Anybody for 'Instant Offer for sale'?". Click here!

    2 Responses to "Anybody for 'Instant Offer for sale'?"

    preet sagar

    Sep 6, 2013

    many a small investors fall prey to high end picture projected by private IPO companies in collusion with SEBI,HNI etc and in line with FPO/OFS by govt PSUs,besides above psus, people have burnt their fingures in MMTC,Coal India FPO/OFS heavily. only solution is small investors should understand this game and completely keep away. Unfortunately Govt ropes in LIC at fag end who too have public money to spend without any remorse

    Like 

    Ajay

    Jul 23, 2013

    The government themselves are the one who showed this way to other prviate. Earlier it was only the private companies were pricing the IPO very high valuations and spread the news to tap the retail investors.

    But the current government has gone beyond that to trap the investors. Look at the price current price of NMDC, Sail, Nalco, Shipping corporation, NTPC post their FPO/OFS , it will clearly prove who is trapping the investors.

    Like (2)
      
    Equitymaster requests your view! Post a comment on "Anybody for 'Instant Offer for sale'?". Click here!
     

    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    You've Heard of Timeless Books... Ever Heard of Timeless Stocks? (The 5 Minute Wrapup)

    Aug 19, 2017

    Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE SENSEX


    Aug 18, 2017 (Close)

    S&P BSE SENSEX 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS