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Book building-b.v.raghunandan

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Deals with the primary market regarding the specifics of book-building process of issue of shares

Deals with the primary market regarding the specifics of book-building process of issue of shares

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Book building-b.v.raghunandan

  1. 1. Book-Building -B.V.Raghunandan Canara College, Mangalore September 22, 2014
  2. 2. Book-Building  A process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and built up and the price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice, circular, advertisement, document or information memoranda or offer document. -SEBI (Disclosure & Investor Protection) Guidelines 2000
  3. 3. Features of Book-Building Quantity Assessment  Price Discovery A 20% Price Band to Bid QIB Portion (50%) and Public Issue Portion (35%) Only Demat Account- Holders 10% Application Money by QIBs 100% by Others
  4. 4. Rationale for Book-Building Institutional Investors Legal Compulsion : Issue Exceeding 5 times the pre-issue networth Bidding Choice for the Applicants Shorter Process of Issue
  5. 5. Financial Intermediaries Merchant Banker as Lead Book- Running Manager Co-Book Runners Syndicate Members Registrar to the Issue Bankers to the Issue
  6. 6. Merchant Banker As Book Runner  Facilitating Appointment of Other Book Runners  Facilitating Appointment of Syndicate Members  Circulation of Information Memorandum  Gathering the Input through IM  Filing Red Herring Prospectus with SEBI along with IM  Facilitating Appointment of other FIs  Filing Due Diligence Certificate with SEBI  Determination of Price Band  Opening & Closure of Subscription List  Allotment of Shares  Getting the Shares Listed  Filing Final Prospectus
  7. 7. Functions of Syndicate Members Facilitating Quantity Assessment Underwriting Collection of Bid-cum-Application Forms
  8. 8. Functions of Registrar to the Issue Appointment of Bankers Printing & Supply of Forms Allotment Other Procedure
  9. 9. Issue Procedure A. Quantity Assessment Stage B. Pre-Issue Stage C. Actual Issue Stage D. Allotment Stage
  10. 10. Quantity Assessment Stage Appointment of Financial Intermediaries Preparation of Information Memorandum Sending Information Memorandum Determination of Quantity & Price-Band Underwriting
  11. 11. Pre-Issue Stage
  12. 12. Actual Issue Stage Opening the Subscription List Receipt of Application cum Bid Forms Uploading the Information Closure of Subscription List Allotment by BRLM & R&T Agents
  13. 13. Allotment Stage Determining the Cut-Off Price Actual Allotment Crediting Demat Accounts Listing the Shares Filing Final Prospectus
  14. 14. A Recent Instance of Book-Building -Snowman Logistics Limited  Objects of the Issue: 1. Capital expenditure for setting up new temperature controlled and ambient warehouses; 2. Long term working capital; and 3. General corporate purposes.  Issue Detail: »» Issue Open: Aug 26, 2014 - Aug 28, 2014 »» Issue Type: 100% Book Built Issue IPO »» Issue Size: 42,000,000 Equity Shares of Rs. 10 »» Issue Size: Rs. 197.40 Crore »» Face Value: Rs. 10 Per Equity Share »» Issue Price: Rs. 44 - Rs. 47 Per Equity Share »» Market Lot: 300 Shares »» Minimum Order Quantity: 300 Shares »» Listing At: BSE, NSE  Snowman Logistics IPO Grading: CRISIL Research has assigned a CRISIL IPO grade of '4/5‘ to the proposed IPO of Snowman Logistics Ltd (Snowman).
  15. 15. Merits of Book-Building Realisation of a High Price Quick Issue Process Fast Availability of Funds Lesser Issue Expenses Quick Update Lack of Uncertainty Quick Allotment Opportunity for Revision Quick Listing of Shares Less Administrative Cost Preference by Institutional Investors Up-to-date Information
  16. 16. Demerits of Book-Building Suitable for Mega Issues Compulsory Demat A/c Networking of Stock Exchange with Subscription Terminals Less Time for Subscription Manipulation of Price Less Access to Investors & Differential Application Money Retail Investors Shy Away Lesser Reservation to Retail Investors Concentrated Holding
  17. 17. THANK YOU

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