Why ULIP mis-selling has become rampant ?
Why is there so much mis-selling of ULIP? How to avoid this mis-selling? Who should take ULIP?
Investment bankers made a fortune out of Zomato’s Rs 9,375 crore initial public offering (IPO), by earning about Rs 229 crore as fees, making it one of the largest payouts for any Indian IPO. Kotak Mahindra Capital, Morgan Stanley, Credit Suisse, Bank of America and Citi were the advisors to the Zomato issue. The fees paid by the food aggregator to the five bankers exceeded every other Rs 5,000 crore- plus IPO, according to data from primary market tracker Prime Database, a report in Mint said.
Why such a large fee?
The fees charged by the advisors are huge because of the effort required in the preparation of the prospectus and getting the deal approved by the regulator. Extensive marketing had to be done in overseas markets to get marquee investors which were clearly reflected in the anchor book of the IPO, according to a report in the Mint.
IPO fees are not equally distributed among the five bankers as many of them have a two-tiered payout model. In the syndicate listed as book-running lead managers, the ‘lead-left merchant bank’ and global coordinators get paid more than others.
An investment banker requesting anonymity said the fee for an IPO that is under the Rs 5,000-crore mark would be in the range of 2-3%. And for IPOs larger than that the fee would be somewhere below 2%. For Zomato however, the bankers’ syndicate was appointed with the option to explore an overseas IPO and substantial work happened on that front. So, the fee would have been structured in line with what an overseas IPO would have paid the banks.
Zomato shares started trading today in the bourses and hit an intraday high in the afternoon pushing its market capitalisation to more than Rs 1,00,000 crore.