The transparency of India’s IPO system
Google’s recent initial public offer was the first time an American company was offering its shares directly to the public via an innovative auction scheme, cutting investment bankers out of the process. But as Francesco Guerrera writes, a similar practice has been in vogue in India for quite a long time.
I know this is the first time a US company is trying to have a public “Dutch auction” instead of relying on investment banks, but ground-breaking it ain’t…
Granted, in India you cannot apply on the web but investors can access one of the world’s largest financial networks with 7,000 terminals scattered around 350 cities. And every step of the bookbuilding process is public. On my computer, I could see regular updates of the number of orders for the TCS offering, their size and price, as if I was one of the underwriters.
Following the bookbuilding process in this kind of detail is much more important than applying for the shares online. After all, the power investment bankers and companies have over investors resides in their exact knowledge of who is bidding what for the shares.
But if the bids are all on the world wide web, the only tension you get is the three second wait while the stock exchange’s page reloads. The financial tyranny of bankers and companies has been overturned in, of all places, India, the world’s largest democracy.
The country that gave the world the decimal system and heliocentric cosmology produced both transparent stock market practices and practitioners like Harshad Mehta and Ketan Parekh. Indira Gandhi was right. So was that character Sanjeev Bhaskar plays in the BBC’s Goodness Gracious Me.