Listing of Brokerage IPO’s

The Indian market is seeing a number of IPOs, in every possible industry segment you could think of. However, what amazes me is the recent run up in Brokaerage firms offerings. Three companies Multi commodity exchange, Emkay share and stock brokers Limited and Steel City Securities Limited.

I am reminded of a few lines from Adam smith: The money game which I produce Verbatim:

….But if a room full of people called a sales organization can go public (many have), and another office of people called an ad agency can go public, there is really no end to the concept. A number of brokerage firms are hungrily waiting for the day when they can go public, i.e. not only sell everybody else’s stocks but their own ,too. (Before they do , you will hear that the tremendous capital needs of Wall street can only be met by outside financing, that the present commission rates simply do not cover the expansion that has to be made, and that half the members of the New york stock exchange are going broke. Then one offbeat firm will go public, followed by a stampede, so that the members of the NYSE, instead of having one or two million dollars’ worth of other people’s companies and a share in their own, can have one or two million dollars’ worth of their own. As Lincoln Steffens said,” I have seen the future , and it works.”

Eventually there is no reason why doctor and lawyers should not go public too; …but at some point of time a smart lawyer is going to see…they could sell the stock at twenty times earnings. …( In good markets, there is always a hungry underwriter. In bad markets, everybody is hungry and all the energies go into demanding that commissions be raised.)

Once the lawyers make it safely public, you can look forward to brain surgeons, Incorporated, which will be sold by brokers as “the most direct way of participating in the broadening growth of medical care, of federal aid programs, of the increased attention to the nation’s health and of the growing trend to such schizophrenia.”
-Adam Smith The Money Game (Page 88-89)


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