DP world - Bad investment or Judgement?

When I got a call from my friend cum ex boss Manish advising me to put money on DP world IPO, I thought cool dude this is the way I can make some additional bucks if I can afford to minimise my normal expenses.

I need to say one thing DP World is into the business of logistics and managing ports across the world. Before public issue the 70% of equity is owned by Government of Dubai. And from the side of business they are situated in a strategically advantageous position. Close connection to western markets, cheaper sourcing from china and india. All these factors made this a very attractive investment.

The IPO was priced at price range of USD1.00 floor and USD1.30 cap priceper share with a minimum lotsize of 3842 shares. (In case of initial public offerings normally there will be a floor price and cap price, floor price is the minimum price at which one can bid and cap price is the maximum price per share, lotsize is the minimum number of shares to be applied per bid).

Experience in Indian bourses were very good in case of IPO's. The minimum investment required was 5K dollars. I had certain insider friends from DP world as well as the listing company mashreq securities. The share broking guys were too much positive about this particular IPO.

Even I remember my good friend Mr Sultan of Mashreq was talking in whispers about the price and expected returns. When I put the application I thought I will definitely get at leat 500 dollars as against 5K dollars. It got listed at same ipo price and started its southword journey from the day one in Nasdaq dubai bourses. I thought the price will go up over 3 months.

The IPO came in Nov 2007, I had to leave UAE in Octo 2008. So I could not wait too long for getting back my investment. The price was less than 50% of IPO, I had washed my hands at USD 0.55 per share (As against i had invested USD 1.30 per share) loosing 60% of investment over just 10 months. Despite having sovereign back up the DP world management cheated the global investors. Whenever I call manish or sultan they say now me as lucky you know the price of DP world is now at USD 0.20 per share down by 85%. This is without being a Satyam like incident.

As my friend suggested I could have bought some cans of beer and saved more money than putting on DP world.

I have now decided not to burn my fingers in global markets always indian markets are safer and whole lifetime is there to wait.

Still i wonder whether i made a bad judgement or It is due to global meltdown?