The most-watched goal in the history of football is Maradona's shot against England in the 86' World Cup. Two Jorge Burruchaga and Jorge Valdano assisted as VIP viewers and were left without the fame or glory that the goal brought to Argentina. Something similar is what is going to happen to foreign institutional invenstors that are pushing Bankia's valuation.
These wealthy insurance fund managers can bring about what could earn them a good deal of money because they are demanding between 60% and 80% discounts of the fixed price of the IPO when it's announced.
But this scenario will not occur. Bankia, at less than 0.4 times book value, would submit the majority of its capital to the market and place 4 billion in the stock market, with a green shoe of 10% to stabilize the security.
A green shoe gives underwriters the right to sell additional shares in a registered securities offering at the offering price, if demand for the securities exceeds the original amount offered.
Going lower than 0.4 times the company´s net assets would terminate the IPO and turn a group of demanding investors into mere spectators.
Edited in English by Brandon Dyches and Jose L. De Haro (joseluisdeharo@eleconomista.es)
