Various kinds of issuance of shares

1. PLACEMENT OF ISSUES

2. Placement of New Issue:
 Offer through Prospectus
 Offer for Sale
 Private Placement
 Right Issue
 Book Building
 Red Herring Prospectus
 Green Shoe Option
 E-IPO
 Bought out Deals

3. OFFER THROUGH PROSPECTUS
 Invites offers for subscription or purchase of any shares or
debentures from the public
 The salient features of the prospectus are
 General Information about company
Capital structure of the company
 Terms of the present issue
 Particulars of the Issue - issue-opening, closing and earliest
closing date of the issue
 Company Management and Project
 Details of the outstanding litigations
 Management perception of risk factors
 Justification of the issue premium
 Financial Information - cost of the project, projected earnings

4. OFFER FOR SALE
 Promoter places his shares with an investment banker (bought out
dealer or sponsor) who offer it to the public at a later date
promoter Sponsor Public
 They purchase at negotiated price and resell at a higher price
 The difference between the two prices is called turn or spread
 Bought out dealer sheds the shares at a premium to the public

5. GREEN SHOE OPTION
A green house is a clause contained in the underwriting
agreement of an IPO that allows underwriters to buy up to an
additional 15% of company shares at the offering.
MEANING:
 The GSO means an option of allocating shares in excess
of the shares included in the public issue
 Where it is an provision in underwriting agreement , that
allows the underwriter to sell excess shares than the original
one offered.
 Also known as “Over Allotment Option”.

6. ORIGINATION
 The term GSO derived from a company called
Green Shoe Manu est 1919.
 This was the I company to initiate this option in
1960

7. EXAMPLE
If a company decides to sell 1 lak shares, the
underwriters (“stabilizer”) can exercise their GSO
and can sell 1.15 lak shares. This enables to
stabilize fluctuating shares prices by increasing or
decreasing the supply of shares according to the
demand to IPO.

8. PRIVATE PLACEMENT
Small number of financial intermediaries (like Unit Trust of India,
mutual funds, insurance companies, merchant banking subsidiaries of
commercial banks) purchase the shares and sell them to investors at a
later date at a suitable price
 A process of inviting subscription to the securities of a corporate issuer
by means other than public offering.
 Private placement usually refers to non-public offering of shares in a
public company.
 Instruments issued in private placements are common stock, preferred
stock or other forms of membership interests, warrants or promissory
notes (including convertible promissory notes), bonds and debentures

9. QUALIFIED INSTITUTIONAL PLACEMENT
 QIP is another tool, whereby a listed company can
issue equity shares, fully and partly convertible
debentures, or any securities other than warrants which
are convertible to equity shares to a QIP.
 Introduced by SEBI

10. RED HERRING PROSPECTUS
Red-herring prospectus" means a prospectus, which does not
have complete particulars on the price of the securities offered
and quantum of securities offered

11. REASONS
•First thing to stimulating people without disclosing
much information about the deal.
• The “red herring” is a reference to a legal disclosure,
printed in red
•Informing to readers that the SEC has not yet reviewed
and approved the document.
•Investors can get an idea of upcoming offerings.

12. RED HERRING PROSPECTUS ISSUERS
Power finance
corporation ltd.
Engineers India limited.
Tata steel limited.

13. BOOK BUILDING
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sharda corpchem.png

14. CLASSIFICATION OF ISSUES