(C) Fundamentals, IPOs and 1,480 times of oversubscription!!!

In our recent IPO history we have witnessed a 1,480 times oversubscription of Trace Group Hold. The off-the-floor IPOs are not practically regulated by the FSC (Financial Supervision Committee) with regard to the subscription terms and conditions. This places the investment intermediaries, the mutual funds and the small investors in a futile mathematical or better mantic dilemma: “How many times would the market oversubscribe”

The unprecedented interest towards Trace was mainly due to the immaturity of the market participants, which was expressed in guessing the subscription coefficient, rather than carefully examining the fundamentals of the company. It is clear for all of the market participants, including the FSC that ready cash amounting at 62% of the GDP of Bulgaria, or 64% of the total bank assets is not available.

I sincerely hope that this ludicrous result would be beneficial for all the market, by managing to overcome its speculative moods and place the strong financial fundamentals of the issuer as a cornerstone to its investment decision.

Additionally, I expect that the intermediary at the next IPO will require a margin deposit and will allocate the shares’ subscription based on the available highly liquid assets and the purchasing power of the participants.