I now learn that even the institutional quota of Shree Ashtavinayak was in fact over-subscribed several times. I asked Sebi for the names of these ‘bold’ institutions that had “rejected” the CRISIL grading and subscribed to the issue. The list is an eye opener. First, it includes ITF Mauritius and VACUF Ltd, the two FIIs identified by Sebi for further investigation in the Nissan Copper case. A Google search shows that VACUF already has done a bulk deal in the shares.

Two other investors are public sector entities Sicom Ltd and Industrial Development Bank of India Ltd. Does the latter still exist? Isn’t it now IDBI Bank? Sebi’s records clearly show an entity registered under the original name, which is making ‘bold’ investments in low graded IPOs.

Canbank Mutual Fund, which refrained from investing in Minar, was a big investor in Shree Ashtavinayak through three schemes - Canbalance, Canbalance II and Canequity Diversified. Did all three fund managers think alike despite Chinese walls? Have they each justified the investment to Trustees of their Asset Management Companies? More importantly, are the Trustees alert and asking questions, especially in the background of Canbank’s notorious involvement in the Harshad Mehta scam in 1992? At that time the nexus between its fund managers and Harshad Mehta drilled a big hole in two popular schemes. Ultimately the parent Canara Bank paid out a few hundred crore rupees to bail out this scheme.

The mutual fund database www.valueresearchonline.com classifies Canequity as a high risk, below average performer with a low rating. Canbalance is also classified as a high risk scheme. More importantly it is a debt oriented scheme that has chosen to invest in a low-rated IPO. Only Canbalance II, an equity oriented scheme, has a high grading.

... contd.