Quote:
Originally Posted by hispy99
How is he going to prevent oversubscription? Let us not fool ourselves, if what is going on continues, the offer will be massively oversubscribed. I know people are becoming dissolutioned with PO/IPO, so that might be the saving grace.
There is a finite number of shares that can be sold. Check out FBN, they raised over 400billion, how could they have absorbed everything? There's a lot of money coming innto the NSE from foreigners, not to talk of Nigerians taking loans just to make quick profits.
|
He is likely to prevent over-subscription simply by richly pricing the shares, e.g. such that the forward P/E ratio of above 30 times! While many investors would still gullibly subscribe for such an expensive IPO, many discerning investors would refrain from subscribing - at least, not large units that they would otherwise have subscribed for. At the same time, Dangote Group would get more money by offering fewer shares, resulting into a sort of "win-win" situation (though, effectively, one-sided win situation) for all.