The IPO of Mahindra Holidays & Resorts - the third public float in the current year and the single largest issue over the last 12 months - could be giving positive signals of a revival in the primary market, but the same may not be true for private equity investors who had put in money through pre IPO deals over the last 2 years.

Mahindra Holidays’ pre IPO investors State Bank of India and Jacob Ballas are sitting on a valuation haircut of 32% at the upper end of the price band for the issue. Mahindra IPO which is opening tomorrow has a price band of Rs 275-325/share in the book-building process.

SBI and Jacob Ballas had invested Rs 79 crore and Rs 39 crore respectively in January 2008, arguably the last PE investment at high valuations, before the markets tanked the same month. The transactions have been done at a price of Rs 479/share.

The Mahindra issue which will seek to raise anywhere between Rs 250 crore to Rs 296 crore, is incidentally the biggest issue since KSK Energy Ventures floated its IPO, incidentally, on the same day (June 23) in 2008.

Kotak Mahindra Capital, HSBC Securities and SBI Capital Markets are the three book running lead managers to the Mahindra Holidays issue.

The hospitality firm that owns Club Mahindra Holidays resorts is a subsidiary of auto maker Mahindra & Mahindra. It had filed a prospectus with Sebi for the IPO in September 2008. Since the time it filed the draft prospectus, the Indian markets have crashed and bounced back. The firm reported total income of Rs 442 crore for the year ended March'09, up 17% over the previous year with EBITD increasing 3% to Rs 145.04 crore and net profit down 5% to Rs 79.8 crore for the year.

At the new price band of the issue, the firm is valued in the range of Rs 2,315-2,736 crore as against the earlier proposed valuation of around Rs 4,000 crore.

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