2. A rights issue is basically when a company offers existing
shareholders a right to purchase additional shares of the
company at a given price, which is at a discount to the
prevailing market price of the stock, to make the offer
enticing for the shareholder and to ensure that the rights
offer is fully subscribed to.
A shareholder has the option of applying for additional shares
also i.e. Over and above what he is entitled to.
The basic premise of carrying out rights offers is to raise
additional capital. The company raises money from its
existing shareholders, who have seemingly posed their faith
in the company by virtue of being its shareholders, to invest
in expanding capacities or to explore other investment
opportunities.
3. Kingfisher Airlines approved raising Rs 2,000 crore through a
rights issue.
The decision came after the airline's attempts to raise $350
million by selling global depository receipts failed to attract
investors.
The financially-strapped airline, which is in the midst of a
debt restructuring, is seeking to raise Rs 2,000
crore, substantially higher than its current market cap of Rs
1,172 crore, leading some equity analysts to believe the
promoters may not subscribe in proportion to their current
holding in the company.
4. Describes the process where a private entity offers its shares
to the public for the first time.
If you have a private business and own all its shares, you can
take some of these shares and sell them to the general public
to raise money.
IPOs are quite popular with the general public across the
world because they are perceived to make easy money for
short term and long term investors alike.
A company decides to take out an IPO, and fixes the number
of shares and price, at which the offer will be made to the
public.
5. A government panel headed by disinvestment secretary
Sumit Bose has decided to recommend a price band of Rs
220 to 240 for the proposed initial public offer (IPO) of the
world's largest coal miner, Coal India Ltd.
The final decision on the price range will be taken by the
empowered group of ministers on disinvestment, headed
by finance minister Pranab Mukherjee, on Tuesday.
The government aims to mop up Rs 15,000 crore from an
issue of 632 million shares, making this the largest-ever
IPO in India's history. The biggest share offering to date is
Reliance Power's IPO in 2008, which raised about Rs
11,500 crore.
The government is planning to give 5% discount to retail
investors as incentive, another official said. The company
has reserved 1% of its offering for its and its eight
subsidiaries' employees, who total 3.95 lakh.
6. An offering of additional shares after the
issuing company has already had an initial
public offering (IPO).
This sometimes means the company is
strapped for cash. A company may issue
more shares to help pay the bills.
7. In July 2007 the ICICI Bank Ltd with the intension of
ambitious expansion plans had launched a Mega IPO as a
subsequent issue at the price band of INR940-950/-
The estimated amount to be garnered through this issue
was INR10,000cr.
This time around it was the Mega IPO hitting the street.
This issue got 3 times subscription.
Also the company was interested in aiming for retail
investor to whom the shares were allotted to them at a
special discounted price of INR890/-
8. Bonus shares are additional free shares issued to the
shareholder by the company. Profitable Companies in
India issue Bonus Shares. These are additional shares
issues given the shareholder without any cost to
existing shareholders.
Free shares of stock given to current
shareholders, based upon the number of shares that
a shareholder owns. While this stock action increases
the number of shares owned, it does not increase the
total value.
This is due to the fact that since the total number of
shares increases, the ratio of number of shares held
to number of shares outstanding remains constant.
9. The board of state-owned Oil and Natural Gas
Corporation (ONGC) on Thursday approved a
special dividend of Rs 32 per share, a stock split
and a bonus issue, the company said.
ONGC will split equity shares of Rs 10 face value
into two shares of Rs 5 face value.
10. Buyback is reverse of issue of shares by a company
where it offers to take back its shares owned by the
investors at a specified price; this offer can be
binding or optional to the investors.
If they have huge cash reserves with not many new
profitable projects to invest in and if the company
thinks the market price of its share is undervalued.
Eg. Bajaj Auto went on a massive buy back in 2000
and Reliance's recent buyback.
11. Shares of ratings agency Crisil surged by as much
as 15 per cent to a 52-week high in morning
trade on the BSE after the company said it will
consider a buyback issue on October 18.
In a regulatory filing, the company said that a
meeting of the board of directors of the company
will be held on October 18 to consider the
proposal to buyback the fully paid equity shares
of the company.
In a regulatory filing, the company said that a
meeting of the board of directors of the company
will be held on October 18 to consider the
proposal to buyback the fully paid equity shares
of the company.
