Citi public issuances are the most profitable for investors. Analysis of all public issuances above R200 crore since 2006 shows that Citi has managed the highest success rate of 43%. For the sake of the study, investor friendly parameters of listing day gains as well as market outperformance were considered with equal weightages given to both.
During the five-and-a-half year period, Citi in all handled 14 public issues, out of which 7 managed to close higher on listing day while 5 of them gave higher returns than that of Sensex.
At close second is the local investment banker Kotak Mahindra Capital which had a success ratio of 42.4 managing the highest number of issues during the period. Interestingly, UBS came out toppers on the basis of successful listing day gains made. Six out of its nine issues closed higher on the listing day. But dismal underperformance to Sensex returns made it lose out to its rivals such as IDFC Capital and SBI Capital markets. None of UBS issues managed to give higher returns than that of Sensex since its respective issuing time. On the market outperformance front, Citi again topped the charts with five out of its 14 issues giving higher returns than Sensex.
The study also reinforces the investment strategy that it is best to invest ? if at all ? in IPOs to exit on the listing day. For one out of two issues have managed to list at a gain during the period. Or in other words show a success ratio of 48%. In comparison, the success ratio of market outperformance has been much lesser at 22%. Four out of five times, IPO/FPO investors ended with lesser returns than that of market on holding after the listing date till now.
In terms of listing day gain, it was Power Grid, BGR Energy systems and IL&FS Engineering and Construction which topped the charts with return of 93.5%, 87.8% and 65.8% respectively. Citibank, Enam and Kotak were the underwriters for the Power Grid issue. As regards market outperformance, it was Jubiliant Foodworks(242%), Cairn India(109%) and Mahindra & Mahindra Financial services(106%) which have managed massive outperformance vis-a-vis that of Sensex since its listing date.
For the sake of study, only those investment bankers were considered which managed atleast 9 issues during the period.If the above filter wasn?t applied, Nomura, HSBC and Royal Bank of Scotland would have topped the charts and in that order. But Nomura managed only 2 issues, both of which listed at gains on first day while one of its issues underperformed the market.
