When you miss the forest for the trees
In the spirit of Thanksgiving, I met with an old pal down at the American Bar this week for some mulled wine and holiday cheer.
My chum used to be a big shot doing IPOs in Asia when we were both in our prime, and we had a ball reminiscing about the good ol’ days. Of course, we couldn’t resist taking a dig at current events and how the fortunes of some investment banks can turn so quickly.
Now this might be an old story, but it’s certainly one worth re-telling — especially after a lot of people were left red-faced this month after Hong Kong’s regulator slapped the underwriters around for an IPO that went horribly wrong years ago.
It’s not uncommon for issuers to promise the earth and sky when it comes to selling their floats, all in an effort to push the highest possible valuation. This particular company, which manages forests, had indeed promised the earth to investors — only there was none.
In fact, the forest that they took analysts to for a jaunt during roadshows was just a front. As you readers probably know, it looked like a forest from the ground, but anyone who flew over it could see that the “forest” was a square of trees that had been planted to fool observers.
Either the company was betting that analysts couldn’t afford a helicopter, or they really thought they could pull off the elaborate lie. No surprise then that the whole thing went belly up and scandalised the investing public.
The incident may have ended in tears, but at least there’s one lesson everyone learned: always do your due diligence from a helicopter.