The Lifestyle IPOs start a gold rush

Thursday, December 24, 2009

The first quarter of 2010 brings a lot of goodies for the IPO investor, but the current definition of retail pricing implies that all of these companies with new business revenues may have to prove themselves for a couple of years before being rewarded in the stock markets. Thus it is mostly going to be a wait and watch for investors in each. Also after the travel agency's ticket of INR 600 Crores, I won't be surprised if each of these net upwards of 500 Crs. Before going further, let's take a look at the 'newcomers' as reported by BS Apart from the MNC banks that are still not listed, these definitely represent the main bulwarks of urban lifestyle today in India, that should be grabbing a growing share of investor moneys in accordance with their growing importance for India

Domino’s Pizza Inc’s
Indian franchise,
a gym chain and a
developer of games
for Sony Corp’s
PlayStation, plans to sell shares
in India, riding a boom in spending
in the world’s second-fastest
growing major economy.
Jubilant Foodworks Ltd, operator
of Ann Arbor, Michiganbased
Domino’s Pizza stores,
will sell a 36 per cent stake and
animator DQ Entertainment (International)
Ltd will offload 25
per cent, among 48 companies
planning first-time share sales,
according to data compiled by
Bloomberg. Talwalkars Better
Value Fitness Ltd intends to sell
a 25 per cent holding in the next
three months, adviser India Infoline
Ltd said.

Talwalkars' is a direct quest for real estate, which could even exceed 67% of any of its single gym's overall capital costs. They do invest in great equipment for the gyms and their personal trainers have been erudite and functional keeping them a notch above investment grade for their investors even now.

As far as Jubilant is concerned, I would wager that it would start a new battle for the others like Hardcastle who have adopted the Franchisee model in India to come to the IPO market. In fact their capital costs have also been arbitrarily high as they chose prime real estate at the height of the boom and till now mostly in dElhi and Mumbai. Apart from the obvious real estate costs of new franchises in B towns and the metros, I expect them to use at least some portion to stabilise the cost charter in Delhi and Mumbai.

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