Eros Share Discussion Threads

[eacn] 08/11/2013 22:29

yorkie52,

There area number of reasons why there is such uncertainty on the IPO date.

The first is that the company is using the IPO as an opportunity to raise funds via a placing. The IPO will not proceed until the placing is complete, which involves the company attending interminable meetings with generally clueless institutions (I know I have been there), following which the broker will gauge institutional interest and then haggle over a placing price.

This book building exercise rarely proceeds to plan and is often fraught, particularly in the latter stages as the broker tries to lower the float price while the company seeks to resist a discount.

Brokers do not like having to complete placings to precise timetables, since it reduces their bargaining power when negotiating with the company (like estate agents, brokers, once engaged, effectively cease to work in the interests of the seller and side with the buyers, who as regular clients call the tune).

Accordingly most placings do not follow a precise timetable and are only ever made public once they are complete. If they fail, they can be swept under the carpet and forgotten, since their existence has never been officially announced or acknowledged.

With an IPO matters are necessarily more public, but timetables are known to slip, and indeed often do. I have been involved with a number of UK IPOs where there have been such delays.

In EROS's case, matters are more public still, since the company is already listed on AIM. That said publicity has been kept to a minimum, so that the broker(s) has as much room for manoeuvre as possible during the book building phase.

The second reason why so little has been said about the US listing is US securities law. Anything said by the company or its advisers in the run up to a float can be, and often is, used against the company in subsequent litigation should the IPO prove anything but a spectacular success. Such is the American dream. Unsurprisingly companies and their advisers typically observe a vow of silence in the run up to a US IPO.

For these reasons I am not overly concerned about a delay in the US flotation, nor the lack of guidance, or the movements in the AIM share price I do not think that the share price on AIM will have a major influence on the float price in NY. However, should this become a concern, I would expect the US broker(s) to seek to provide support in the UK market immediately prior to the IPO. The broker(s) are incentivised to do so since their fees will be directly linked to the amount raised in the placing, and they will not wish prospective investors to be spooked by the AIM share price

Having said that, I do not expect to see intervention on this side of the pond, since I don't anticipate US institutions will pay much, if any, attention to the share price on AIM. In my experience, institutions rarely have much clue about the businesses in which they invest and do virtually no due diligence, relying instead upon the broker to ensure that their bread is well buttered in an IPO. Brokers who don't look after the interests of their institutional clients in this way, rapidly loose their placing power, which is their principal source of earnings and thus their lifeblood.

[yorkie52] 08/11/2013 17:21

Has anybody got a clue whats happening? The NASDAQ site says the IPO was happening today yet the iposcoop.com site in the post above says trading will commence next Wednesday. Somebody must know whats happening surely? Getting a bit worried that it might have been pulled yet again and that's why the price has plunged yesterday and today.

[joe_satriani2] 08/11/2013 15:58

Am I missing something or are these a bit of a steal back at 256 to buy with all signs pointing to a US listing in excess of £3?

[rivaldo] 08/11/2013 14:09

Thx chaps - only another week to wait then. As Evaluate says, perhaps best not to be left behind in the Twitter bandwagon and garner some attention for ourselves next week.

[sphere25] 08/11/2013 14:02

Surprise surprise!

[polythene] 08/11/2013 13:56

Brutal communications and timing

[zho] 08/11/2013 13:31

I've been in touch with EROS IR and they tell me that:

i) We haven't been told a firm listing date because the US SEC restricts communication during the listing process (which seems kind of odd to me)

ii) The US road show is underway and should be complete by the middle/end of next week (nothing happens on Monday because it's Veterans' Day, a national holiday)

[evaluate] 08/11/2013 12:56

Probably best to leave it until next week.

Today's going to be all about Twitter.

If that goes as well as expected, next week will be perfect timing.

[dr contrarian] 08/11/2013 12:20

This has just been confirmed from EROS - No US listing today.

[dr contrarian] 08/11/2013 12:19

Spoke to my broker, who mentioned that the float may not occur today.

[aishah] 08/11/2013 11:51

Loaded up. Was waiting for the pullback here. IPO will fly in the US imo. dyor

[rivaldo] 08/11/2013 10:41

Agreed yorkie52, imo the UK price is completely unrelated to the US opening and is down to the well-known factors outlined above.

This afternoon's overlap period could be interesting - if the price in the USA is anything like $15-$17 or above then it has to be worth buying more in the UK.

[sphere25] 08/11/2013 10:23

Well, the CERTNYS has been received.

Looks a stinker atm tho...pricing well under the $15-$17 range

But who knows maybe a few of the twitter investors will turn up with a massive hangover and bid EROS up

[yorkie52] 08/11/2013 10:20

The current price either indicates that the IPO price will be at about $13 ie. under the $15 - $17 range or its mms reducing the price because of investors selling because they don't want to deal on the NYSE. We will have to wait to see the IPO price. If the IPO is successful, which I can't see why it shouldn't given the undervaluation compared to similar companies in US, then this could easily go to $20 plus in the next few weeks. I am tempted to buy more at these levels but am already well overweight in this stock.

[rivaldo] 08/11/2013 09:25

Brownie, please read eacn's post above and my post 9037. These provide simple explanations imho.

[brownie69] 08/11/2013 09:00

SP this morning suggests all not well with the IPO?

Any news?

[tux223] 08/11/2013 08:54

DAK why there isn't going to be a months-long period of dual listing? Is it a consequence of New York stock exchange rules, or a consequence of Eros not caring about its smaller investors' interests?

[tux223] 08/11/2013 08:50

£65 - Ouch! I guess this is an advantage of my stock being in TD's nominee. Presumably just one fee across all TD's clients, which TD will (I hope) swallow.

[eacn] 08/11/2013 06:24

rivaldo,

The NYSE has the IPO listed for today, Friday 08.11.2013, but I have no further information than that.

Brokers have been informed of the consolidation, but the timeline has not been confirmed.

I cannot confirm that the NYSE listing will take place tomorrow since I am not party to the book building exercise, but I would be surprised if that did not occur.

As I alluded to in my previous post,I would expect there to be a last minute flurry of sell orders on AIM prior to and immediately before the listing from PIs who: do not wish to be bothered or are not in a position to transfer their stock to the US; hold their stock in an ISA; or, do not wish to take the risk that the share price may fall post IPO before they have a chance to trade the stock.

Marketmakers are likely to take full advantage of this situation.

P.S. There are fees for "re-alignment" (i.e. transfer to the DTC), starting at £65 for a transfer of stock whose value is equal or less than £35,000.

[czar] 07/11/2013 16:23

check out Don't know what all the panic is about on AIM but its fairly typical.

[rivaldo] 07/11/2013 16:06

Sphere, see my post 9037 above. Simples.

Eacn has confirmed that the IPO is on for tomorrow. He's extremely trustworthy imho from prior experience.

[sphere25] 07/11/2013 15:59

How can the IPO be on tomorrow when EROS have said nothing and the stocks tanking

@ 2.79 the US equivalent sits at just shy of $13.50

poorly received IPO?