IPO Duopoly

There’s science, and a little bit of madness, involved in marketing an initial public offering. The entire process is time-bound; then, there’s the thing about having to cope with developments that could range from inclement weather, which cancels a roadshow or press conference, at best to a negative research report or media report trashing the IPO at worst.
In some cases, as happened most recently with the IPO of Puravankara Projects Ltd, issues over which the company and its managers have no control can often wreak havoc with carefully laid plans: In this case, a worldwide fall in equity markets, and a dip in the Bombay Stock Exchange’s realty index, translated into weak response for Puravankara’s IPO and the issue eventually had to be repriced and its deadline extended.
All this usually happens rapidly: The actual IPO process lasts four days on average and is preceded by a fortnight of high-decibel publicity.
The pressures are compounded when several IPOs fight for subscriber money. In June 2007 alone, some Rs19,105 crore worth of IPOs hit the Indian stock market. That can work both ways. In some cases, it could mean smaller issues are ignored; in others, it could mean even smaller issues get oversubscribed because everyone is in a buying frenzy. That’s exactly what happened to the Rs110 crore IPO of Vishal Retail Ltd, which coincided with that of DLF Ltd. The issue was subscribed 81 times.
Although Rs26,118 crore worth of IPOs have hit the stock market since April, compared with Rs24,993.37 crore in all of 2006-07, there aren’t too many advertising and marketing specialists fighting it out for a slice of the business. The business is dominated by Concept Public Relations India Pvt. Ltd and the Adfactors Group. The two bundle advertising, public relations, event management and investor relations, and have a reputation for getting the job done.
Concept, a Mumbai-based communications and marketing group headed by Vivek Suchanti, marketed 13 of the 35 issues that hit the market in the quarter ended 30 June. Rajesh Chaturvedi and Madan Bahal’s Adfactors Group was a close second, with 10 issues. Together, the two agencies handled 23 of the 35, or 65%, of all IPOs in the first quarter of 2007-08.
The two companies did well in 2006-07 too, marketing 68 of the 85 IPOs that hit the stock market that year. Concept managed 33 and Adfactors, 35. That kind of dominance hasn’t made the two companiescomplacent; they compete for almost every contract, and the rivalry between them is so keen that Suchanti even refuses to refer to Adfactors by name (he calls the company “my competitor”).
The duopoly enjoyed by Adfactors and Concept is almost complete. There are two other relatively small but similar companies—Pressman Advertising & Marketing Ltd and Sobhagya Advertising Service—but their share is decreasing steadily. Pressman is owned and managed by Vivek Suchanti’s cousin Navin Suchanti.