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1) For MOFSL the key considerations for IPO

To increase the balance sheet and international credibility

Exit route to its PE firms and employees
To motivate the employees by helping them greater value from the company and also
increase the market value
additional capability in case of any future acquisitions to be made
Timing of IPO:
o Confused about going for IPO right now or after 1 year when the value will be
greater
o Also, there is no guarantee the market wont go for one its roller coaster rides

Other factors that influenced the decision are

Loss of control in the company in case majority stake sold to PE players

PE investment from global investors will help the company improving the standing
and valuation of the company
In the case PE there should be synergy between the MOFSL and the firm to leverage
and thus create value to all stake holders involved
PE route can be chosen to bring on board influential people in to the company

Offering
Valuation
offering

PE
9.3% equity

IPO

of

Major challenge

$277 million
Finding the right investor Right
profile
timing

market

2)

The issuer of this IPO Motilal Oswal group.

The lead book runner in the process Citibank
The registration partner Intime Spectrum Registry Limited.
The main promoter Motilal Oswal and Ramdeva Agarwal
The issue is made through the book-building process, with 60% of net offer to public
being allotted to the Qualified Institutional Buyers (QIBs), and the no of shares issued
to QIB was 17,04,240 , the non-institutional bidders were 284,040and retail individual
bidders were given 852,120 shares.
.1. Qualified Institutional Buyers Atleast 1,704,240 Equity Shares
2. Non-Institutional Bidders
Employee Reservation

Up to 284,040 Equity Shares

142,310 Equity Shares

3. Retail Individual Bidders

Up to 852,120 Equity Shares

Book running underwriter Citigroup Global Markets India Private Limited

For the book building process, the open price of issue was 725 and the closing price
of issue was 825
The authorized share capital of the Issuer was increased from Rs.120,000,000 (Rupees
One Hundred and Twenty Million) consisting of 60,000,000 (Sixty Million) equity
shares of face value of Rs.2 each to Rs.1,370,000,000 (Rupees One billion three
Hundred and Seventy Million) consisting of 60,000,000 (Sixty Million) equity shares
of face value of Rs 2 each and 12,500,000 (Twelve Million and Five Hundred
Thousand) preference shares of face value Rs 100 each.

3. If the issue is oversubscribed by 7.5 times with a contribution of 60%

from the institutions, 20% from NIIs and 20% from RIIs, what will be the
number of shares applied from each category
TOTAL
SHARES
issued
shares
Institutions
NII's
RII's

2982710

7.5

22370325
13422195
4474065
4474065

4.
close
issue
Date
price
price
Returns
11-Sep-07
976.85
825
15.5449%
12-Sep-07
964.85
825
14.4945%
13-Sep-07
943.35
825
12.5457%
14-Sep-07
971.4
825
15.0710%
17-Sep-07
962.75
825
14.3080%
18-Sep-07
957.6
825
13.8471%
19-Sep-07
967.45
825
14.7243%

5)
Factors considered for the valuation of MOFSL:
-

Large and diverse distribution network

o 1160 business locations in 363 cities and towns

-

Strong research and sales team

Skilled and experienced top management

Well established brand

Wide range of financial products and services

EPS - 228.51

P/E ratio Highest of 171 and average of 18.4

Return on Net Worth 54.70 %

Net Asset Value 97.96

Peer Comparison MOFSL are superior

Peer Average:
-

P/E 40.2

RONW 17.8

The BRLM argued that considering the factors mentioned above, the issue price of 725-825
was justified

issued
shares
price
market cap
EV
cash
LONG TERM DEBT

2982710
825
2460735750
5967735750
IN MILLION
2165
2165000000
5672
5672000000