Your SlideShare is downloading. ×
Public Issue & Management
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Public Issue & Management

754
views

Published on

Public issue process in India

Public issue process in India

Published in: Education

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
754
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. TOPIC: PUBLIC ISSUE & BOOK-BUILDING1
  • 2. TABLE OF CONTENTS A) PUBLIC ISSUE INTRODUCTION TYPES OF PUBLIC ISSUE MOTIVATING FACTOR OF GOING PUBLIC FACTORS DETERMINING ATTRACTIVENESS OF THE IPO ISSUING CO ADVANTAGES OF GOING PUBLIC DISADVANTAGES OF GOING PUBLIC ALTERNATIVES TO IPO PREPARATORY STEPS TO IPO2 PRICING OF IPO
  • 3. CONTD .. B) BOOK-BUILDING  INTRODUCTION TO BOOK-BUILDING IN INDIA  NEED OF BOOK-BUILDING  DISTINGUISH BETWEEN :  FIXED PRICE ISSUE & BOOK-BUILDING ISSUE  BOOK-BUILDING PROCESS  REVERSE BOOK-BUILDING3  REVERSE BOOK-BUILDING PROCESS
  • 4. INTRODUCTION 1. Companies Fall Into Two Board Categories: Private AndPublic 2. Most Small Businesses Are Privately Held, But Large Companies Can Be Private Too 3. Public Companies Have Thousands Of Shareholders And Are Subject To Strict Rules And Regulations 4. From An Investor’s Standpoint, The Most Exciting Thing About A Public Company Is That The Stock Is Traded In The Open Market, Like Any Other Commodity4
  • 5. TYPES OF PUBLIC ISSUE • Initial public offering (IPO) • Follow on public offering (FPO) • Rights Issue (RI) • A preferential issue5
  • 6. CONTD … Issues Public Rights Preference IPO FPO Fresh Issue Fresh Issue Offer for Offer for Sale Sale6
  • 7. MOTIVATING FACTOR OF GOING PUBLIC 1. Expansion Of Operations 2. Increases Market Value 3. Acquisition with other companies 4. Brand Image 5. Diversify And Liquefy Personal Holdings 6. Tax Planning Strategy 7. Enhances The Company’s Reputation7
  • 8. FACTORS DETERMINING ATTRACTIVENESS OF THE IPO ISSUING COMPANY A) Attractive Track Record B) Prior Venture Capital Funding C) Growth Trend In The Future D) Highly Visible Products/Services E) Capable And Committed Management F) Benefits The Outweigh The Costs Of Going Public G) Timing The Market For An IPO8
  • 9. ADVANTAGES OF GOING PUBLIC a) Availability Of Cash/Long-term Capital b) Increased Market Value c) Exit Strategy d) Enhanced Net Worth And Borrowing Ability e) Prestige/Reputation f) Ability To Attract And Keep Key Personnel g) Mergers/Acquisitions9
  • 10.  Expenses  Ongoing Expenses  Loss Of Control  Loss Of Privacy  Pressure For Short-term Performance  Investor Relations  Difficult to revert – Public to Private10
  • 11. ALTERNATIVES TO IPO  Mezzanine Financing  Private Equity  Bank Loan  Leasing11
  • 12. PREPARATORY STEPS TO IPO o Develop A Deep Management Team o Develop Budgets And Measure Performance o Appoint Independent Members To Your Board Of Directors o Create An Audit Committee o Build A Positive Public Image12
  • 13. PRICING OF IPO Theoretically There Are Two Methods Available For The Price Discovery Known 1. FIXED PRICE Price of the securities is known to the investors in advanc 100% Advance Payment is to be made13
  • 14. 2. BOOK BUILDING  20% Price Band Is Offered By The Issuer To The Investors  The Issuer Appoints The Lead Merchant Banker Who Specifies The Number Of Securities To Be Issued  The Book Runners Evaluate The Bids On The Basis Of Demand At Various Price Levels  SEBI guidelines recognized book building as an alternative mechanism of pricing14
  • 15. The Quality Of Disclosures In The Offer Documents Was Very Poor The Traditional Fixed Price Method Of Tapping Individual Investors Suffered From Two Defects  delay in the IPO process  Under-pricing Of Issue In Book Building Cost And Risks Can Be Avoided Because The Issuer Company Can Withdraw From The Market15
  • 16. DISTINGUISH Fixed Price Issues Book Building Issues Offer Price Price at which the A 20% price band is securities are offered offered by the issuer and would be allotted within which investors is made known in are allowed to bid and advance to the final price is investors determined by the issuer only after closure of the bidding Demand Demand for the Demand for the securities offered is securities offered, and known only after closure that too at various of the issue. prices is available on real time basis on the exchange’s website16 during bidding period to the prospective
  • 17. Payment 100% advance payment is 10% advance payment is required to be made by required to be made by the investors at the time the QIBs along with the of application application while other categories of investors pay 100% advance along with the application Prospectus In case of fixed price In case of book building, issues, prospectues price is not fixed. It contains exact number of depends upon demand as securities on offer and an shown in bidding process. exact price. Hence So numbers in the projections with proper prospectus (price,number value of equity and debt of shares) are undefined are shown. and are shown as [.]. This prospectus is called as Red Herring Prospectus.17
  • 18. Company plans an IPO via the book-build route Appoints a merchant banker as book-runner Issues a draft prospectus (containing all mandatory company disclosures other than price) Draft prospectus filed simultaneously with concerned authority (SEBI)18
  • 19. CONTD … Book-runner appoints syndicates members and registered intermediaries to gamer subscription Price discovery begins through the bidding process At close of bidding, book runner and company decide upon the allocation and allotments19
  • 20. A) Offers Are Collected At Various Prices, Which Are Above Or Equal To The Floor Price B) The Reverse Book Building Price (I.E. Final Price/Exist Price) Is Determined By BRLM In Consultation With The Acquirer Or Promoter Of The Company C) The Parties Who Are Associated With De-listing Of Securities Are The Acquirer/Promoter Of A Company The BRLM The Trading Members And Existing Shareholders Of The Company D) Internationally, Stock Exchanges Do Not Impose Any Restriction On De-listing And Allow De-listing20 Subject To Certain Conditions
  • 21. Public (100% of announce the ment of Escrow estimated Acquirer/ Account Promoter final amount of price(i.e. considerati of a company exit price) on to be through deposited) newspaper Book Running Lead Manager Designated Trading (BRLM) Members Intimation of the final acceptance price (i.e. National exit price) securities Shareholders of the clearing Announcement to same company corporation of NSE or any the press stock exchange from which delisting is21 sought to be made

×