a) Halcyon Crops Ltd (HCL) is an agriculture company that had its initial public offer (IPO)...

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a) Halcyon Crops Ltd (HCL) is an agriculture company that had its initial public offer (IPO) of shares on 8th January 2017. The company had 100,000,000 shares on issue before the offer. The share offer was underwritten by Reebo Investments, with total costs of 5 percent of the offer value. The share offer consisted of 10,000,000 shares (no shares were sold by the existing shareholders in this offer). The fixed share offer (subscription) price was $1.00 per share. Subscriptions received by the underwriter at the offer close date were for a total of 10,000,000 shares. Total income and the total number of shares for HCL and for two competitors, who both listed on the local stock exchange in 2015, are provided below. Total Income (2016) Number of shares HCL Competitor 1 Competitor 2 $9,548,000 $20,000,000 $15,600,000 100,000,000 160,000,000 130,000,000 $ 1.50 $ are as follows: Date Competitor's share price (end of 2016) 1.44 Furthermore, post-listing share prices for HCL and market (industry) index information Halcyon Crops Ltd (HCL) Market Index Industry Index 5/01/2017 10,240 1,550 8/01/2017 $ 1.20 10,260 1,560 9/01/2017 $ 1.22 10,275 1,575 10/01/2017 $ 1.20 10,287 1,580 11/01/2017 $ 1.14 10,261 1,565 12/01/2017 $ 1.25 10,320 1,590 8/01/2018 $ 1.40 10,720 1,680 8/01/2019 $ 1.25 11,160 1,720 8/01/2020 $ 1.20 11,290 1,790 10/01/2021 $ 1.10 11,540 1,850 9/01/2022 $ 1.00 12,100 1,990 Based on the above scenario answer the following questions: i. Using relative valuation, what is you estimate of the value of HCL? ii. From the IPO company's perspective, is the share offer underpriced or overpriced and by how much by the end of the first trading day? a) Halcyon Crops Ltd (HCL) is an agriculture company that had its initial public offer (IPO) of shares on 8th January 2017. The company had 100,000,000 shares on issue before the offer. The share offer was underwritten by Reebo Investments, with total costs of 5 percent of the offer value. The share offer consisted of 10,000,000 shares (no shares were sold by the existing shareholders in this offer). The fixed share offer (subscription) price was $1.00 per share. Subscriptions received by the underwriter at the offer close date were for a total of 10,000,000 shares. Total income and the total number of shares for HCL and for two competitors, who both listed on the local stock exchange in 2015, are provided below. Total Income (2016) Number of shares HCL Competitor 1 Competitor 2 $9,548,000 $20,000,000 $15,600,000 100,000,000 160,000,000 130,000,000 $ 1.50 $ are as follows: Date Competitor's share price (end of 2016) 1.44 Furthermore, post-listing share prices for HCL and market (industry) index information Halcyon Crops Ltd (HCL) Market Index Industry Index 5/01/2017 10,240 1,550 8/01/2017 $ 1.20 10,260 1,560 9/01/2017 $ 1.22 10,275 1,575 10/01/2017 $ 1.20 10,287 1,580 11/01/2017 $ 1.14 10,261 1,565 12/01/2017 $ 1.25 10,320 1,590 8/01/2018 $ 1.40 10,720 1,680 8/01/2019 $ 1.25 11,160 1,720 8/01/2020 $ 1.20 11,290 1,790 10/01/2021 $ 1.10 11,540 1,850 9/01/2022 $ 1.00 12,100 1,990 Based on the above scenario answer the following questions: i. Using relative valuation, what is you estimate of the value of HCL? ii. From the IPO company's perspective, is the share offer underpriced or overpriced and by how much by the end of the first trading day?

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i Using relative valuation the estimate of the value of HCL can be calculated using the pricetoearni... View the full answer