Are HNIs picking up Cox & Kings' IPO?

After a series of IPO's that have gone down under, broking houses have again started opening their leverage books for High Net worth Individuals or HNIs, reports CNBC-TV18's Haresh Soneji.

Here is a verbatim transcript of his comments on CNBC-TV18. Also watch the accompanying video.

Let us look at the books that have been offered. Morgan Stanley is offering at 10% margin. So you can leverage upto 10 times at 10% interest rates for about 13 days. Edelweiss is doing at 20% margin. So you can leverage up to 5 times, 10% interest rate is for 12 days. Kotak is at 25% margin. So you can leverage upto 4 times at 11% interest for about 12 days.

The key thing to look at is that the books are open and HNI's are buying into this because when I spoke to several of these book runners we basically found that interest activity was there from the HNI side.

Now 27.44 lakh shares are being offered by the travel company Cox & Kings in the NII category and it has already subscribed about 1 time. What we learn from sources and what these brokerage houses who are opening these leverage books are talking about is that the issue will be subscribed atleast 5 times in the NII category.

So we worked out the math as to what exactly is the interest cost for this leverage and it works out to be about Re 1 every time the book is subscribed.

If the book is subscribed 5 times we are looking at Rs 5 as the interest cost that you will be paying for these 12 days on the Cox & Kings IPO. Looking at the anchor investor the book has been offered at Rs 330 and Rs 5 on top of Rs 330 that is about 1-1.5% in the green.

If you want to consider the grey market, it is offering nothing at this point in time. There are no buyers; there are no sellers in the grey market. So that is not giving away any details. But Rs 5 is what the HNI is pegging at.