If you live in and around Mumbai, Pune, you must have heard or you must have visited Adlabs Imagica, an amusement park. The promoters of this theme park want to raise money by issuing shares to common people like you and me, the technical term for such issuance is an initial public offering (IPO) . So Adlabs Imagica’s promoters have offered around 2 crore shares with each share priced at Rs 221-Rs 230 in this initial public offering and it plans to raise about Rs 450-460 crores of funds. The issue will be open for subscription till March 13.
Should you invest your savings in this IPO?
Going by what legendary investors say, you should invest your money in a business that you understand, or the brands you see around you. So in that sense, you understand what Adlabs does. However that shouldn’t be the only criteria to invest in any company. You will read numerous articles that point out to long term benefits of this kind of IPO: this business needs lot of investment so it will not have many competitors etc.
However as this analysis points out, the company is raising money primarily to pay the huge loans it has taken to set up the theme park. And it will take a while before company starts generating profits.
As this second analysis in OneMint.com points out, you should invest in this IPO if you can take risk with your savings. Or may be if you have extra savings that you can take risk with.
My verdict: If you got extra savings, then wait for some more time, as I believe new companies with better finances will come out with their initial public offering also.
Here is what you will need to do to invest in any Initial Public Offering (IPO)
1. For online investing: Technically, you don’t need a trading account to invest in an IPO. However if you want to apply online in an IPO online, stock brokers will expect you to do have a trading account with them.
But a demat account is a must as the shares of the IPO will be held in electronic format in this demat account.
2. For offline investing: A demat account only. Apply for the IPO through any broker by filling an application form. It makes sense to have a trading account as well because in future if you want to buy more shares or sell the shares you bought in an IPO, you will need a trading account.