The Hindu Business Line : Book building

This is with reference to "Book-building: Information better than floor price" (Business Line, February 16). The article says that it is necessary to change the book building system to enable companies get competitive offer prices.

However, one feels that the success of an initial public offer depends on what phase and mood the capital market is in.

If the companies were to enter couple of years ago they would not have got the response they have in recent months.

In fact, the shares prices of companies did nose dive much below their "floor values" in the bear market so much so that they were available for a song.

Just imagine the plight of those who got the shares on such a valuation.

If the companies are so confident about their so-called intrinsic value they would not have waited for bull market to float the initial public issues.

What is wrong if investors today make some money in the short-term by selling the shares allocated to them to recover whatever they may have lost during bear phases?

One hopes that the companies set to issue IPOs in coming months do not price their offers at very high premiums.

Gopal Sutar

Riyadh (Saudi Arabia)

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