This is important if they have funded the purchase with borrowed money. The remaining money has to be coughed up after allotment and there will be no opportunity to flip them on listing and cash in on any immediate price run up. Shouldn’t Sebi have looked closely at all these issues? Especially since it had made an example out of DLF to its own board and the company has a fairly patchy record of regulatory compliance (Sebi has penalised it for at least two other market violations besides its attempt to deprive minority investors of the benefits of capital restructuring).

Ironically enough, while DLF has a poor compliance record, it has built a fairly formidable record for the quality of its construction and its ability to deliver classy projects and modern townships, especially in and around Delhi. As the first of the mega IPOs, that are set to take away considerably liquidity from the Indian capital market, large institutional investors believe that the many sales gimmicks and incentives will indeed help the DLF IPO sail through despite what is clearly an aggressive pricing strategy.

The question is, how will retail investors, who follow the dictum of caveat emptor make up their minds? If they only go by fundamentals and also factor in the decisive slow down in the realty market, there is a good chance that they would have lost an investment opportunity. Equity investment is indeed a risky business.