Softlogic IPO

Softlogic private investors to gain over 300% capital gain after IPO

http://www.asiantribune.com/news/2011/05/25/sri-lanka-softlogic-private-investors-gain-over-300-capital-gain-after-ipo

Any Comments....

specialist wrote:Softlogic private investors to gain over 300% capital gain after IPO

http://www.asiantribune.com/news/2011/05/25/sri-lanka-softlogic-private-investors-gain-over-300-capital-gain-after-ipo

Any Comments....

so the same thing that was done by Expo is being done by Softlogic.

The big boys who got the private placement at Rs 7 can get a 200% return by even selling out at Rs 21.

Looks like this is another ridiculously priced IPO that deserves to fail.

the failure of this depends on when Expo starts trading. If it starts trading and goes down from IPO price before the issue date of Softlogic, then it could be a failure.

specialist wrote:Softlogic private investors to gain over 300% capital gain after IPO

http://www.asiantribune.com/news/2011/05/25/sri-lanka-softlogic-private-investors-gain-over-300-capital-gain-after-ipo

Any Comments....

All are playing with poor people

npp wrote:the failure of this depends on when Expo starts trading. If it starts trading and goes down from IPO price before the issue date of Softlogic, then it could be a failure.

Expo unlikely to strat trading before 9th June.

innam wrote:

specialist wrote:Softlogic private investors to gain over 300% capital gain after IPO

http://www.asiantribune.com/news/2011/05/25/sri-lanka-softlogic-private-investors-gain-over-300-capital-gain-after-ipo

Any Comments....

so the same thing that was done by Expo is being done by Softlogic.

The big boys who got the private placement at Rs 7 can get a 200% return by even selling out at Rs 21.

Looks like this is another ridiculously priced CPO that deserves to fail.

Yeah this is another massively overpriced IPO.. we retailers should avoid this like EXPO.

Thing with these insanely priced IPO's is that they somehow succeed. The company will somehow get their equity. It's kind of like politics - no matter how many times a certain person gets elected and does absolutely nothing for the people, they(the voters) forget all of this by the time of the next election and reelects this same useless person. No one refrains from voting.

I think its same with these IPO's. if we can teach them a lesson once, by not subscribing to insanely expensive IPO's, i personnaly think that it would have quite an effect on future IPO pricings.

What do you guys think?

I think CSE must get some thing from India
http://forum.srilankaequity.com/t3321-ipo-overhype-india-sets-n-example

Hey guys ,

investors who subscribed for a private placement are the most risk takers , therefore they should be rewarded.We know that the private placement's issue price is 72 , they have a right to subdivide any numbers before going for a IPO giving private investors correct price

I am a small investor , but I am CIMA accountant . My view is , we can't do judgments without evaluating softlogic's true value

What do you say ?

enslive wrote:Hey guys ,

investors who subscribed for a private placement are the most risk takers , therefore they should be rewarded.We know that the private placement's issue price is 72 , they have a right to subdivide any numbers before going for a IPO giving private investors correct price

I am a small investor , but I am CIMA accountant . My view is , we can't do judgments without evaluating softlogic's true value

What do you say ?

how can be more risk taker when someone buying RS 7 per share than some one buying RS 21 per share .this is common sence . i m a MBBS doctor my friend

dr aruna wrote:

enslive wrote:Hey guys ,

investors who subscribed for a private placement are the most risk takers , therefore they should be rewarded.We know that the private placement's issue price is 72 , they have a right to subdivide any numbers before going for a IPO giving private investors correct price

I am a small investor , but I am CIMA accountant . My view is , we can't do judgments without evaluating softlogic's true value

What do you say ?

how can be more risk taker when someone buying RS 7 per share than some one buying RS 21 per share .this is common sense . i m a MBBS doctor my friend to avoid those traps.

Exactly, to understand that we do not need to be CIMA qualified, but need some common sense and simple arithmetic.
Those people think all investors are fools to subscribe any overpriced IPO, and majority of retailers proved that their thinking is true by oversubscribing them heavily in past.
However thinks are gradually changing, People get some insight about their wiles, under subscription of Expo lanka retail category would be the starting point.

enslive wrote:Yes Dr. Aruna , I agree one point of you ,''common sense well enough to do gambling''

However I again say '' we can't do judgments without evaluating softlogic's true value''

@enslive : Kindly refrain from using Colours , Its diffecult to the eye when reading. Also I notice few requests from Quibit requesting members not to use colours. May be you are new and you have used it since you are not aware about it.

Hope you correct yourself next time.

enslive wrote:Yes Dr. Aruna , I agree one point of you ,''common sense well enough to do gambling''

However I again say '' ]we can't do judgments without evaluating softlogic's true value''

so what will happen if we correctly evaluate the true value of a share? if you dispute, why don't you do a sample analysis?

whatever the value is 7/- and 29/- is not anywhere close, is it?
if value is 7/- then IPO price is massively over valued and not fair for the subscribers.
if value is 29/- then that's more than a favor for the private investors.

so tell me what judgement can we make if we evaluate the true value?

You have to take 72 first and find out the reasons why they subdivide shares ;
If they just subdivide without proper reasoning (Adequate reserve , investment) , then your simple analysis is correct

enslive wrote:You have to take 72 first and find out the reasons why they subdivide shares ;
If they just subdivide without proper reasoning (Adequate reserve , investment) , then your simple analysis is correct

subdivision does not affect the value, does it?

anyway, do you think that they could have done an IPO @ 290/- issue price had they not sub divided?

Soft Logic is not soft. It is very hard. Let's teach another lesson keeping them hunting. Then, the big boys would put some money and make it oversubscribed as it won't cost much on their average price

I think we should avoid this IPO If there is private placement for Rs 7.

are we going to lose every ipo's in future?

Might be. If CSE will not take some action

I don't mind if the founders of the company do subdivisions as much as they want and increase their stake. ODEL also did that prior to the IPO. Founders actually are the risk takers. What makes private placement different from IPO? If you have s*** load of money you will get invited for private placements. So companies always make the private placements attractive than IPO to attract high net worth investors. If its not attractive enough for them, then they wont subscribe. So private placement is always at a massive discount and almost very less risky. Its unfair to give a massive discount to the big fish and then offer at high for public

enslive wrote:Hey guys ,

investors who subscribed for a private placement are the most risk takers , therefore they should be rewarded.We know that the private placement's issue price is 72 , they have a right to subdivide any numbers before going for a IPO giving private investors correct price

I am a small investor , but I am CIMA accountant . My view is , we can't do judgments without evaluating softlogic's true value

What do you say ?

Don't just try to apply what you studied on books directly and blindly. I'm also a CIMA qualified (not an accountant;of course) with a degree on top.

Pricing cheap when there is real risk is justifiable. Those who support and help the company to stand up during initial days are called Venture Capitalists. for them it is ok even to give at very cheap price. because they bear the real risk.

Say Google got the seed capital of 25mn from a renowned venture capitalist named John Doerr,the same person gave hands to Netscape and Amazon to stand up in the initial stages. the people like them worth getting the share at huge discount because of the risk they are putting in.

http://en.wikipedia.org/wiki/John_Doerr

the so called risk bearers of Softlogic are not those who got into the boat when their were huge level of uncertainty. thus not entitle for this level of risk premium for holding the share for last one year on a well established company like Softlogic.

As someone pointed out the founders may or may not split the shares on their own discretion but selling those shares at a very cheap price to HNWI & JKH and pricing the same share at a very high premium at the IPO is unjustifiable.

tinyman wrote:

Pricing cheap when there is real risk is justifiable. Those who support and help the company to stand up during initial days are called Venture Capitalists. for them it is ok even to give at very cheap price. because they bear the real risk.

Say Google got the seed capital of 25mn from a renowned venture capitalist named John Doerr,the same person gave hands to Netscape and Amazon to stand up in the initial stages. the people like them worth getting the share at huge discount because of the risk they are putting in.

the so called risk bearers of Softlogic are not those who got into the boat when their were huge level of uncertainty. thus not entitle for this level of risk premium for holding the share for last one year on a well established company like Softlogic.

Good point by tinyman

Some valuation discount can apply to private deal on Softlogic as investors might have been locked in for a while, but even then, not sure if grey market trading has happened, like in the case of Expo Lanka.

But discount can not be too high as Softlogic was no start-up operation, and the CEO has been saying they will go public for the past year.

But let's see the share valuations first, we can't decide just on basis of absolute share prices.

Private placement was supposedly done in March 2010, so it would have been based on March 2011 forward earnings. Pricing should not be done on historical earnings, some details of which were in Softlogic's Asiri Hospital mandatory offer document.

Public IPO in June 2011, will be based on March 2012 forward earnings.

So we wait to see the numbers, and forecasts.

cse.alpha wrote:
Good point by tinyman

Some valuation discount can apply to private deal on Softlogic as investors might have been locked in for a while, but even then, not sure if grey market trading has happened, like in the case of Expo Lanka.

But discount can not be too high as Softlogic was no start-up operation, and the CEO has been saying they will go public for the past year.

But let's see the share valuations first, we can't decide just on basis of absolute share prices.

Private placement was supposedly done in March 2010, so it would have been based on March 2011 forward earnings. Pricing should not be done on historical earnings, some details of which were in Softlogic's Asiri Hospital mandatory offer document.

Public IPO in June 2011, will be based on March 2012 forward earnings.

So we wait to see the numbers, and forecasts.

Mate I got a chance to have a glance at the Softlogic 2009-2010 annual report. What i observed is the company is running with very high level of gearing with almost all the assets are mortgaged, some with personal guarantees by AP.

Will wait till the numbers to come out

Lets wait for the Prospectus without speculating its content. Softlogic is a well run business with a proven track record. Such businesses should be evaluated on the basis of its business merits and future potential than mere speculation.

Given below is the Sector Breakdown of Softlogic Holdings as depicted in the website www.softlogic.lk for the information of the readers.