Tuesday, November 27, 2007

IGate - Delisting - Part III

Currently, the market price is going up as the delisting process is going on.The buyback will occur only at the price in which Igate can get 90% of the holdings. So, it will be quite high if some of them do not bid or put some high price. So, Putting a high price/Not bidding are almost the same. The CMP is at around Rs 392/- now.

When you are putting a high price, the exit price will be lower than your price and then you can tender your shares at the exit price at later point of time. But instead, if you prefer not to bid also, it is the same case, you can directly sell the shares to the company at the exit price. So, both of them are same...

But what happens when you are bidding at a lower price, you are actually getting down the exit price and it affects all of us. So, If you aren't sure how much it is worth it, you can see the current status of the buyback @ Buyback-Igate

So, stay out of bidding if you are in the view of bidding less. I can see some 25 shares (very meagre amount .0001%) tendered at Rs.288.90 (base price), I guess this one is from the employee of Igate to lower the exit price. So, Retail investors can just be out of the game of de-listing and you can anyway render your shares back at the exit price decided after Dec. 4.

If you haven't received your bid forms, you can ask the nearest Karvy office and the address is available in the internet at both BSE and NSE.

You should have to transfer your Igate shares to Karvy account before bidding and then you can bid directly going to the nearest Karvy centre. As said before, if you are going to bid less, don't bid at all. You will get more exit price because of that. But this is not going to change the exit price that much, if you are having very less shares. I am sure you will get more price than at least Rs.430/-.
There are some bids at Rs.600/- too :)).

Cheers!!! Enjoy minting profit in Igate.

Tuesday, November 20, 2007

Igate delisting - Is it worth the bet? - Part II

I said it is worth the bet in my previous post.

For delisting, the owner should atleast have 90% of the company's share. This is not the case with Igate which has only 80.1% currently.
But it can continue with delisting process as it is approved by the shareholders.

The floor price for the delisting process is set at Rs. 288.90/- , which is the 26 day average of high and low price. The current market price is Rs. 374/-.
As I said before, there is no ceiling price and one can bid at whatever price he likes!

The price will be decided after the Reverse book building process and it is decided by the price quoted by majority of the people much similar to IPO book building.

The management then decided to carry on or cancel the de-listing process at will after the exit price is known. If the exit price is approved, then that price will be the price at which the management buy back all the shares.

If the price you quoted is greater than exit price then yours will not be bought by the company. Any way, you can sell those shares at the exit price within 6 months to the company. If you miss that bus also, your share is less valued than a normal paper!!

If you quoted less price than the exit price, yours will also be taken at the exit price. The management can play around to get lower exit price (what you will do if you were in the management side). For this, they have exercised ESOPs, Employee shares and distributed to the employees at less than 250 according to the grades. They will be more than willing to sell at the management's disposal, say Rs. 300/-.

There will be people, who will bid way higher price as they dont want to sell igate shares and it will in turn increase the exit price. The best price is certainly above Rs. 400/- and I would expect the exit price to be greater than that mark.

You can see what is the current status during the book building process itself in NSE and then decide upon your final price as each and everyone's price matter here, but not that much.

If you have not bidded but have shares, you can also sell at exit price within 6 months.

Cheers!!! Get Ahead for Igate.

Igate Delisting - Is it worth the bet? - Part I

Igate solutions has come up with a delisting plan and the market reacted with a surge of 10% on the same day. Current market price is Rs.373/-

It is going to get de-listed by the 1st week of December. Is it worth the bet to buy now?

I will give you more insight on this deal. The company's profit is moving up every year starting from 2004 when it reported negative EPS. Because of the management change, it has come up to buy back all the shares from the Indian share market. It would continue to be traded on NYSE though.

As it is a IT company, the current rupee Vs dollar issue certainly affects the revenue. But still the chairperson of IGate has announced that the buy back price will certainly be higher and he is happy about it :)
If we keep P/E as 15, then the price at FY08 will certainly be around Rs. 435/- . If P/E is kept at the price would be around Rs.415/- . The buy back price is expected to above Rs.400/-.

Igate is going to buy back its shares by a process called Reverse Book Building process and it is expected to start on November 26th. It is going to end on November 29th. The preference is given to people having their shares in demat account.

Reverse Book Building process is similar to Book Building process that occurs during IPO. Essentially, all the people who have shares have the right to offer at what ever price they expect from the company. The floor price will alone be set unlike IPO book building where there will be ceiling price also. The process is visible to all people and one can see the current status before bidding.

With the current market price at 374 and with the expected buy back price at more than Rs. 400/-, it is certainly worth the risk. You are getting >10% returns in less than a month. Is it not a good deal?