This document summarizes the key aspects of raising capital through a primary market public offering in India. It discusses the various methods companies use to raise funds, such as issuing shares, debentures, or global depository receipts. It then describes the functions of the primary market and the parties involved, including lead managers, registrars, underwriters, bankers, and advertising agents. It provides details on the prospectus, book building process, and other placement methods such as rights issues, private placements, bought deals and fixed price offerings. Overall, the document offers an overview of the Indian primary market and the process for companies conducting a public securities offering.
The document discusses the various agencies involved in managing a public issue in India. The key agencies mentioned are:
1. Managers to the issue who are responsible for drafting documents, marketing, and coordinating other agencies.
2. Registrars to the issue who receive share applications and allocate shares.
3. Underwriters who guarantee to purchase unsold shares in case of low subscription.
4. Bankers to the issue who are responsible for collecting application money.
5. Advertising agents who promote the public issue through various advertising mediums.
6. Financial institutions that may underwrite issues and provide financial assistance.
Ipo process, how price band determined, role of merchant banker & underwriterBiswajit Bhattacharjee
The document discusses the IPO process and related topics in detail across multiple pages. It covers:
1) What an IPO is and its advantages/disadvantages for companies.
2) The various parties involved in an IPO like managers, registrars, underwriters, bankers, and regulators.
3) How IPOs can be placed through different methods like prospectus, bought deals, private placements, and book building.
4) How the price band for an IPO is determined and the roles of merchant bankers and underwriters.
The document discusses various long term financing options for companies including venture capital, initial public offerings, rights issues, private placements, preferential allotments, and term loans. It provides details on the process and requirements for each type of financing. Some key points covered include the roles of merchant bankers and underwriters in IPOs, the pricing and allotment process for rights issues, and the steps involved in applying for and disbursing a term loan.
Ipo process, how price band determined, role of merchant banker & underwriterBiswajit Bhattacharjee
The document discusses the IPO process and the roles of merchant bankers and underwriters. It provides details on how the price band for an IPO is determined, with the company deciding the price band in consultation with merchant bankers. It also outlines the services provided by merchant bankers such as corporate counseling, credit syndication, issue management, and portfolio management. Underwriters ensure subscription to shares by committing to subscribe to any shares not purchased by investors, for a commission.
The primary market deals with new security issues and helps transfer resources from savers to users. It involves various intermediaries like merchant bankers, underwriters, and registrars. The main functions of the primary market are origination, underwriting, and distribution of new securities. Origination involves evaluating project viability. Underwriting guarantees minimum subscription. Distribution involves selling securities to investors through brokers and agents. The primary market facilitates capital formation by bringing together investors and those seeking capital.
This document discusses various aspects of raising capital through a public issue in the primary market. It describes the objectives of issuing capital, parties involved like managers, registrars, underwriters, bankers, advertising agents, and government agencies. It also covers aspects considered in selecting underwriters, placement of issues through prospectus, rights issues, private placements, book building, and factors for investors to consider.
The document discusses the process of issuing stocks to the public market for the first time (initial public offering) in India. It describes the key parties involved - lead managers who manage the issue, registrars who handle registrations, underwriters who guarantee subscriptions, bankers who handle funds, advertising agents, and regulatory agencies. It also outlines the different methods used for public issues - prospectus, bought deals, private placements, rights issues, and book building.
This document discusses equity shares and how they are issued in the primary market. It begins by defining the primary and secondary markets. In the primary market, companies issue new securities to raise capital. The document then discusses features of equity shares like maturity, income rights, and limited liability. It explains various methods of primary issuance like prospectus offers, private placements, right issues, and book building. It also outlines the roles of intermediaries in the issuance process like lead managers, registrars, bankers and underwriters.
The document discusses the various agencies involved in managing a public issue in India. The key agencies mentioned are:
1. Managers to the issue who are responsible for drafting documents, marketing, and coordinating other agencies.
2. Registrars to the issue who receive share applications and allocate shares.
3. Underwriters who guarantee to purchase unsold shares in case of low subscription.
4. Bankers to the issue who are responsible for collecting application money.
5. Advertising agents who promote the public issue through various advertising mediums.
6. Financial institutions that may underwrite issues and provide financial assistance.
Ipo process, how price band determined, role of merchant banker & underwriterBiswajit Bhattacharjee
The document discusses the IPO process and related topics in detail across multiple pages. It covers:
1) What an IPO is and its advantages/disadvantages for companies.
2) The various parties involved in an IPO like managers, registrars, underwriters, bankers, and regulators.
3) How IPOs can be placed through different methods like prospectus, bought deals, private placements, and book building.
4) How the price band for an IPO is determined and the roles of merchant bankers and underwriters.
The document discusses various long term financing options for companies including venture capital, initial public offerings, rights issues, private placements, preferential allotments, and term loans. It provides details on the process and requirements for each type of financing. Some key points covered include the roles of merchant bankers and underwriters in IPOs, the pricing and allotment process for rights issues, and the steps involved in applying for and disbursing a term loan.
Ipo process, how price band determined, role of merchant banker & underwriterBiswajit Bhattacharjee
The document discusses the IPO process and the roles of merchant bankers and underwriters. It provides details on how the price band for an IPO is determined, with the company deciding the price band in consultation with merchant bankers. It also outlines the services provided by merchant bankers such as corporate counseling, credit syndication, issue management, and portfolio management. Underwriters ensure subscription to shares by committing to subscribe to any shares not purchased by investors, for a commission.
The primary market deals with new security issues and helps transfer resources from savers to users. It involves various intermediaries like merchant bankers, underwriters, and registrars. The main functions of the primary market are origination, underwriting, and distribution of new securities. Origination involves evaluating project viability. Underwriting guarantees minimum subscription. Distribution involves selling securities to investors through brokers and agents. The primary market facilitates capital formation by bringing together investors and those seeking capital.
This document discusses various aspects of raising capital through a public issue in the primary market. It describes the objectives of issuing capital, parties involved like managers, registrars, underwriters, bankers, advertising agents, and government agencies. It also covers aspects considered in selecting underwriters, placement of issues through prospectus, rights issues, private placements, book building, and factors for investors to consider.
The document discusses the process of issuing stocks to the public market for the first time (initial public offering) in India. It describes the key parties involved - lead managers who manage the issue, registrars who handle registrations, underwriters who guarantee subscriptions, bankers who handle funds, advertising agents, and regulatory agencies. It also outlines the different methods used for public issues - prospectus, bought deals, private placements, rights issues, and book building.
This document discusses equity shares and how they are issued in the primary market. It begins by defining the primary and secondary markets. In the primary market, companies issue new securities to raise capital. The document then discusses features of equity shares like maturity, income rights, and limited liability. It explains various methods of primary issuance like prospectus offers, private placements, right issues, and book building. It also outlines the roles of intermediaries in the issuance process like lead managers, registrars, bankers and underwriters.
This document provides an overview of how the primary stock market works. It discusses:
1) The primary market allows companies to raise capital by issuing new shares to investors. This helps companies fund new ventures, business expansions, or modernizations.
2) The process involves companies filing an offer document with regulators, opening the issue for public subscription, allotting shares, and ultimately listing the shares on a stock exchange.
3) Pricing can be done through a book building process, where investors bid for shares within a price band, or at a fixed price set by the company.
This book provides basic information about the stock market to the beginners. Your all doubts have been cleared after reading this book related to the stock market investment.
The document discusses the key parties involved in a public issue of securities. These include managers to the issue who oversee the process, registrars who handle applications and allotment, underwriters who guarantee subscription, bankers who collect funds, advertising agencies who promote the issue, financial institutions who may underwrite or lend, and government agencies who regulate the issue. It also outlines the process for collection centers, placement of the issue such as through a prospectus, and requirements for the prospectus content.
This document provides an overview of venture capital financing in India. It defines venture capital as money provided by outside investors to finance new, growing, or troubled businesses in exchange for equity. It then discusses the various stages of venture capital funding including early stage, expansion, and acquisition/buyout financing. The rest of the document outlines the venture capital investment process, including deal origination, screening, evaluation, deal structuring, post-investment activities, and exit planning. It also provides examples of venture capital funding deals in India and lists the top 5 early stage venture capital firms in the country.
What is Equity Market
How to understand trading in Equity market
How to invest in Equity Market
How to trade in Equity Market
How to earn in Equity Market
The document provides an overview of how companies raise capital through primary equity markets. It defines a primary market as the market where companies issue new securities to raise funds. The process involves companies filing an offer document with regulatory authorities, opening the issue to public subscription, allotting shares on a proportional or lottery basis, and finally listing the shares on a stock exchange. Primary markets play a crucial role in facilitating long-term capital formation for companies.
The document discusses financial markets, specifically focusing on the primary market where new securities like stocks and bonds are first offered to investors. It provides details on the types of financial instruments traded in the primary market, the process for companies to issue equity and debentures, and regulations from the Securities and Exchange Board of India governing primary market activities. The primary market facilitates the transfer of funds from investors to companies raising capital for new projects and expansion.
The document discusses various types of long-term financing options for companies including venture capital, initial public offerings, rights issues, private placements, and term loans. It also covers the processes involved in undertaking these financing activities such as appraising projects, issuing sanction letters, executing agreements, and monitoring loan disbursements. Key terms related to equity and debt financing of companies are defined.
The primary market allows companies to issue new securities to raise capital directly from investors. It involves an initial public offering (IPO) process where a company issues shares on a stock exchange for the first time. The document discusses the key participants in the IPO process like merchant bankers and registrars. It also outlines the steps of preparing and filing an offer document with regulators, opening subscriptions, allocating shares, and ultimately listing the company's shares on a stock exchange. The primary market thus facilitates capital formation for companies through public issuances.
The document discusses primary and secondary markets. The primary market involves the initial sale of securities to raise capital, such as initial public offerings. Companies work with investment bankers to facilitate primary market activity. The secondary market involves the subsequent trading of existing securities on stock exchanges. It provides liquidity for investors and encourages new investment. Some key differences between primary and secondary markets are that the primary market deals with new issues, has no set location, and occurs before the secondary market.
This document discusses how firms raise capital and the venture capital financing process. It states that firms can raise capital through borrowing, equity financing, or both, depending on their size, life cycle stage, and growth prospects. Venture capital generally finances new, high-risk ventures and provides not just funding but active participation in running the firm. Venture capitalists invest in stages and typically take equity in the company in exchange for financing. Choosing the right venture capitalist depends on factors like financial strength, management style, references, contacts, and exit strategy.
White Paper on IPO This study includes the definition, types, procedures, regulatory aspects and various terms associated with issue of initial public offerings (IPOs) in Indian stock market.
Primary capital market scenario in India, primary market intermediaries, primary market activities, methods of raising resources from primary market; secondary market scenario in India, reforms in secondary market, organization and management, trading and settlement, listing of securities, stock market index, steps taken by SEBI to increase liquidity in the stock market.
The document provides an overview of the Indian securities market, including its key segments and participants. It discusses the primary market process for floating new issues through public offerings, rights issues, and private placements. It also summarizes the roles of various intermediaries like merchant bankers and registrars involved in the issuance process. Additionally, it covers secondary market trading and settlement, and describes the structure and regulation of the Indian financial system.
process of floating of ipo and role of merchant bankerAbhishek Jain
The document discusses the role of merchant bankers in the initial public offering (IPO) process. It explains that when a company wants to raise funds through an IPO, it appoints a merchant banker to handle the process. The merchant banker assesses the company's performance and earnings potential to determine an appropriate issue price. It is responsible for completing all required documentation for regulatory approval. For large IPOs, a syndicate of merchant banks may work together with one leading the process. The key roles of the merchant banker include managing debt and equity offerings, placement and distribution of securities, providing corporate advisory services, assisting with project financing, loan syndication, and venture capital financing.
Merchant banking provides essential financial services that help corporate growth and economic development. It includes functions like issue management, pre-investment studies, corporate counseling, project counseling, loan syndication, portfolio management, project finance, and working capital arrangements. Registered merchant banks in India include Kotak Mahindra Capital, HDFC Bank, ICICI Bank, and IDBI Bank.
The document discusses primary market and security issuances in the primary market. It begins by explaining that the primary market provides an opportunity for issuers like governments and corporations to raise funds through the issuance of new securities. It then describes some key features of the new issue market including that it is for raising long-term capital and securities are sold for the first time. It also outlines some common methods of securities issuance in the primary market like fixed price and book building.
The document discusses various aspects of the new issue market in India including initial public offerings (IPO) where firms issue stock to the public for the first time, and seasoned equity offerings (SEO) where already public firms issue additional stock. It covers the key functions of origination, underwriting, and distribution in new stock issues. It also discusses the roles of various intermediaries that facilitate new issues such as merchant bankers, brokers, and underwriters.
The document discusses the new issue market, which is where new securities or stocks are issued to acquire capital for new or existing companies. It describes the functions of origination, underwriting, and distribution. Various parties involved include managers, registrars, underwriters, bankers, and advertising agents. Methods for floating shares include prospectus, bought deals, private placements, rights issues, and book building. Measures to protect investors include project appraisal, underwriting, disclosure requirements, exchange clearance, and redressal of grievances. Recent trends include aggressive pricing, low liquidity and returns, and economic slowdown.
Methanex is the world's largest producer and supplier of methanol. We create value through our leadership in the global production, marketing and delivery of methanol to customers. View our latest Investor Presentation for more details.
This document provides an overview of how the primary stock market works. It discusses:
1) The primary market allows companies to raise capital by issuing new shares to investors. This helps companies fund new ventures, business expansions, or modernizations.
2) The process involves companies filing an offer document with regulators, opening the issue for public subscription, allotting shares, and ultimately listing the shares on a stock exchange.
3) Pricing can be done through a book building process, where investors bid for shares within a price band, or at a fixed price set by the company.
This book provides basic information about the stock market to the beginners. Your all doubts have been cleared after reading this book related to the stock market investment.
The document discusses the key parties involved in a public issue of securities. These include managers to the issue who oversee the process, registrars who handle applications and allotment, underwriters who guarantee subscription, bankers who collect funds, advertising agencies who promote the issue, financial institutions who may underwrite or lend, and government agencies who regulate the issue. It also outlines the process for collection centers, placement of the issue such as through a prospectus, and requirements for the prospectus content.
This document provides an overview of venture capital financing in India. It defines venture capital as money provided by outside investors to finance new, growing, or troubled businesses in exchange for equity. It then discusses the various stages of venture capital funding including early stage, expansion, and acquisition/buyout financing. The rest of the document outlines the venture capital investment process, including deal origination, screening, evaluation, deal structuring, post-investment activities, and exit planning. It also provides examples of venture capital funding deals in India and lists the top 5 early stage venture capital firms in the country.
What is Equity Market
How to understand trading in Equity market
How to invest in Equity Market
How to trade in Equity Market
How to earn in Equity Market
The document provides an overview of how companies raise capital through primary equity markets. It defines a primary market as the market where companies issue new securities to raise funds. The process involves companies filing an offer document with regulatory authorities, opening the issue to public subscription, allotting shares on a proportional or lottery basis, and finally listing the shares on a stock exchange. Primary markets play a crucial role in facilitating long-term capital formation for companies.
The document discusses financial markets, specifically focusing on the primary market where new securities like stocks and bonds are first offered to investors. It provides details on the types of financial instruments traded in the primary market, the process for companies to issue equity and debentures, and regulations from the Securities and Exchange Board of India governing primary market activities. The primary market facilitates the transfer of funds from investors to companies raising capital for new projects and expansion.
The document discusses various types of long-term financing options for companies including venture capital, initial public offerings, rights issues, private placements, and term loans. It also covers the processes involved in undertaking these financing activities such as appraising projects, issuing sanction letters, executing agreements, and monitoring loan disbursements. Key terms related to equity and debt financing of companies are defined.
The primary market allows companies to issue new securities to raise capital directly from investors. It involves an initial public offering (IPO) process where a company issues shares on a stock exchange for the first time. The document discusses the key participants in the IPO process like merchant bankers and registrars. It also outlines the steps of preparing and filing an offer document with regulators, opening subscriptions, allocating shares, and ultimately listing the company's shares on a stock exchange. The primary market thus facilitates capital formation for companies through public issuances.
The document discusses primary and secondary markets. The primary market involves the initial sale of securities to raise capital, such as initial public offerings. Companies work with investment bankers to facilitate primary market activity. The secondary market involves the subsequent trading of existing securities on stock exchanges. It provides liquidity for investors and encourages new investment. Some key differences between primary and secondary markets are that the primary market deals with new issues, has no set location, and occurs before the secondary market.
This document discusses how firms raise capital and the venture capital financing process. It states that firms can raise capital through borrowing, equity financing, or both, depending on their size, life cycle stage, and growth prospects. Venture capital generally finances new, high-risk ventures and provides not just funding but active participation in running the firm. Venture capitalists invest in stages and typically take equity in the company in exchange for financing. Choosing the right venture capitalist depends on factors like financial strength, management style, references, contacts, and exit strategy.
White Paper on IPO This study includes the definition, types, procedures, regulatory aspects and various terms associated with issue of initial public offerings (IPOs) in Indian stock market.
Primary capital market scenario in India, primary market intermediaries, primary market activities, methods of raising resources from primary market; secondary market scenario in India, reforms in secondary market, organization and management, trading and settlement, listing of securities, stock market index, steps taken by SEBI to increase liquidity in the stock market.
The document provides an overview of the Indian securities market, including its key segments and participants. It discusses the primary market process for floating new issues through public offerings, rights issues, and private placements. It also summarizes the roles of various intermediaries like merchant bankers and registrars involved in the issuance process. Additionally, it covers secondary market trading and settlement, and describes the structure and regulation of the Indian financial system.
process of floating of ipo and role of merchant bankerAbhishek Jain
The document discusses the role of merchant bankers in the initial public offering (IPO) process. It explains that when a company wants to raise funds through an IPO, it appoints a merchant banker to handle the process. The merchant banker assesses the company's performance and earnings potential to determine an appropriate issue price. It is responsible for completing all required documentation for regulatory approval. For large IPOs, a syndicate of merchant banks may work together with one leading the process. The key roles of the merchant banker include managing debt and equity offerings, placement and distribution of securities, providing corporate advisory services, assisting with project financing, loan syndication, and venture capital financing.
Merchant banking provides essential financial services that help corporate growth and economic development. It includes functions like issue management, pre-investment studies, corporate counseling, project counseling, loan syndication, portfolio management, project finance, and working capital arrangements. Registered merchant banks in India include Kotak Mahindra Capital, HDFC Bank, ICICI Bank, and IDBI Bank.
The document discusses primary market and security issuances in the primary market. It begins by explaining that the primary market provides an opportunity for issuers like governments and corporations to raise funds through the issuance of new securities. It then describes some key features of the new issue market including that it is for raising long-term capital and securities are sold for the first time. It also outlines some common methods of securities issuance in the primary market like fixed price and book building.
The document discusses various aspects of the new issue market in India including initial public offerings (IPO) where firms issue stock to the public for the first time, and seasoned equity offerings (SEO) where already public firms issue additional stock. It covers the key functions of origination, underwriting, and distribution in new stock issues. It also discusses the roles of various intermediaries that facilitate new issues such as merchant bankers, brokers, and underwriters.
The document discusses the new issue market, which is where new securities or stocks are issued to acquire capital for new or existing companies. It describes the functions of origination, underwriting, and distribution. Various parties involved include managers, registrars, underwriters, bankers, and advertising agents. Methods for floating shares include prospectus, bought deals, private placements, rights issues, and book building. Measures to protect investors include project appraisal, underwriting, disclosure requirements, exchange clearance, and redressal of grievances. Recent trends include aggressive pricing, low liquidity and returns, and economic slowdown.
Methanex is the world's largest producer and supplier of methanol. We create value through our leadership in the global production, marketing and delivery of methanol to customers. View our latest Investor Presentation for more details.
UnityNet World Environment Day Abraham Project 2024 Press ReleaseLHelferty
June 12, 2024 UnityNet International (#UNI) World Environment Day Abraham Project 2024 Press Release from Markham / Mississauga, Ontario in the, Greater Tkaronto Bioregion, Canada in the North American Great Lakes Watersheds of North America (Turtle Island).
Cleades Robinson, a respected leader in Philadelphia's police force, is known for his diplomatic and tactful approach, fostering a strong community rapport.
ZKsync airdrop of 3.6 billion ZK tokens is scheduled by ZKsync for next week.pdfSOFTTECHHUB
The world of blockchain and decentralized technologies is about to witness a groundbreaking event. ZKsync, the pioneering Ethereum Layer 2 network, has announced the highly anticipated airdrop of its native token, ZK. This move marks a significant milestone in the protocol's journey, empowering the community to take the reins and shape the future of this revolutionary ecosystem.
World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4
World economy charts case
World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4study presented by a Big 4
The E-Way Bill revolutionizes logistics by digitizing the documentation of goods transport, ensuring transparency, tax compliance, and streamlined processes. This mandatory, electronic system reduces delays, enhances accountability, and combats tax evasion, benefiting businesses and authorities alike. Embrace the E-Way Bill for efficient, reliable transportation operations.
2. Companies raise funds to finance their projects
through various methods. The promoters can bring
their own money of borrow from the financial
institutions or mobilise capital by issuing securities.
The funds maybe raised through issue of fresh shares
at par or premium, preferences shares, debentures or
global depository receipts. The main objectives of a
capital issue are given below: ·
To promote a new company ·
To expand an existing company ·
To diversify the production ·
To meet the regular working capital requirements ·
To capitalize the reserves
3. New Issue Market (Primary Market)
Stock available for the first time are offered through new
issue market. The issuer may be a new company or an
existing company. These issues may be of new type or
the security used in the past
4. The Function
The main service functions of the primarymarket.
Origination deals with the origin of the new issue.
The proposal is analysed in terms of the nature of the
security, the size of the issue, timing of the issue and
floatation method of the issue.
Underwriting contract makes the share predictable
and removes the element of uncertainty in the
subscription
Distribution refers to the sale of securites to the
investors. This is carried out with the help of the lead
managers and brokers to the issue.
5. Parties Involved in the New Issue
Lead managers --are appointed by the company to mange the public
issue programmes.
Their main duties are
(a) drafting of prospectus
(b) preparing the budget of expenses related to the issue
(c) suggesting the appropriate timings of the public issue
(d) assisting in marketing the public issue successfully
(e) advising the company in the appointment of registrars to the issue,
underwriters, brokers, bankers to the issue, advertising agents etc
(f) directing the various agencies involved in the public issue.
Many agencies are performing the role of lead managers to the issue.
The merchant banking division of the financial institutions, subsidiary
of commercial banks, foreign banks, private sector banks and private
agencies are available to act as lead mangers.
EX: SBI Capital Markets Ltd., Bank of Baroda, Canara Bank,. ICICI
Securities & Finance Company Ltd., etc
6. Registrar to the Issue
After the appointment of the lead managers to the issue, in
consultation with them, the Registrar to the issue is
appointed.
The Registrars normally receive the share application from
various collection centers.
They recommend the basis of allotment in consultation
with the Regional Stock Exchange for approval.
They arrange for the dispatching of the share certificates.
Retain the issuer records at least for a period of six months
from the last date of dispatch of letters of allotment to
enable the investors to approach the registrars for redressal
of their complaints
7. Underwriters
Underwriting is a contract by means of which a person gives
an assurance to the issuer to the effect that the former would
subscribe to the securities offered in the event of non
subscription by the person to whom they were offered.
The person who assures is called an underwriter.
The underwriters do not buy and sell securities. They stand
as back-up supporters
underwriting is done for a commission.
Underwriting provides an insurance against the possibility
of inadequate subscription.
Underwriters are divided into two categories
(i) financial institutions and banks
(ii) brokers and approved investment compnies
8. Before appointing an underwriter, the financial
strength of the prospective underwriter is considered
because he has to undertake the agree non-subscribed
portion of the public issue. The other aspects
considered are
(a) experience in the primary market
(b) past underwriting performance and default
(c) outstanding underwrting commitment
(d) the network of investor clientele of the under
underwriter and
(e) his overall reputation.
9. Bankers to the Issue
Bankers to the issue have the responsibility of
collecting the application money along with the
application form.
The bankers to the issue generally charge commission.
Depending upon the size of the public issue more than
one banker to the issue is appointed.
The number of collection centers is specified by the
central government. The bankers to the issue should
have branches in the specified collection centers.
10. Advertising Agents
Advertising plays a key role in promoting the public issue.
Hence, the past track record of the advertising agency is
studied carefully.
Tentative programmes of each advertising agency along
with the estimated cost are called for. After comparing the
effectiveness and cost of each programmes with the other, a
suitable advertising agency is selected in consultation with
the lead managers to the issue.
The advertising agencies take the responsibility of giving
publicity to the issue on the suitable media.
The media may be newspapers/magzines/hoardings/ press
release or a combination of all.
11. Government and Statutory Agencies
The various regulatory bodies related with the public
issue are:
1. Securities Exchange Board of India
2. Registrar of companies
3. Reserve Bank of India (if the project involves
foreign investment )
4. Stock Exchange where the issue is going to be listed
5. Industrial licensing authorities
6. Pollution control authorities (clearance for the
project has to be stated in the prospectus
12. Placement of the Issue
1. Initial issue through prospectus
2. Bought out deals/offer for sale
3. Private placement
4. Right issue
5. Book building.
13. Offer Through Prospectus
According to Companies (Amendment) Act 1985, application forms for
shares of a company should be accompanied by a prospectus
. In simple terms a prospectus document gives details regarding the
company and invites offers for subscription or purchase of any shares or
debentures from the public.
The draft prospectus has to be sent to the Regional Stock Exchange
where the shares of the company are to be listed and also to all other
stock exchanges where the shares are proposed to be listed.
The stock exchange scrutinizes the draft prospectus.
After scrutiny if there is any clarification needed, the stock exchange
writes to the company and also suggests modification
14. The salient features of the prospectus are
1. General Information
. Name and address of the registered office of the company.
. Opening, closing and earliest closing dates of the issue.
Name and address of lead managers.
Capital structure of the company
. Issued, subscribed and paid up capital.
. Size of the present issue giving separately reservation for preferential
allotment to promoters and others.
Details regarding the promoters’ contribution
Terms of the present issue -
terms of payment, procedure and time schedule for allotment
.How to apply - availability of forms, prospectus and mode of payment.
15. Particulars of the Issue
a. Object of the issue
b. Project cost
c. Means of financing (including promoter’s contribution)
Company,. Management and Project
a. History, main objects and present business of the company.
b. Subsidiary (ies) of the company, if any
c Promoters and their back ground. Names, addresses and occupation
of managing directors and other directors
e. Location of the project.
f. Plant and machinery, technological process etc.
g. Collaboration or assistance in marketing by the collaborators.
The product
1. Nature of the products-consumer/industrial and end users.
2. Export possibilities and export obligations,
16. Financial Information
a. Financial performance of the company for last five years should be
given from the audited annual accounts in tab
Balance sheet data:
equity capital, reserves (revaluation reserve, the year of revaluation and
its monetary effect on assets) and borrowings.
. Profit and loss data: sales, gross profit, net profit, dividend paid if any.
. Any change in the accounting policy during the last three years and its
effect on the profit and reserves of the company.
. Statutory and other information
Minimum subscription
17. Bought out Deals (Offer for Sale)
the promoter places his shares with an investment banker (bought out
dealer or sponsor) who offer it to the public at a later date.
In other works in a bought out deal, an existing company off-loads a
part of the promoters’ capital to a wholesaler instead of making a
public issue.
The whole seller is invariably a merchant banker
Benefits –
the cost of raising funds is reduced in bought out deals. For issuing
share to the public the company incurs heavy expenses, which may
invariably be as high as 10 percent of the cost of the project
bought out deal helps the entrepreneurs who are not familiar with the
capital market but have sound professional knowledge to raise funds.
for a company with no track record of projects, public issues at a
premium may pose problems
18. Private Placement
In this method the issue is placed with a small number of financial
institutions.
Through private placement equity shares, preference shares,
cumulative convertible preference shares, debentures and bonds are
sold, corporate bodies and high networth individuals.
advantages:
Cost Effective Private placement is a cost-effective method of rasing
funds. In a public issue underwritng, brokerage, printing, mailing and
promotion account for 8 to 10 per cent of the issue cost
Time Effective In the public issue the time required for completing
the legal formalities and other formalities takes usually six months or
more. But in the private placement the requirements to be fulfilled are
less and hence, the time required to place the issue is less, mostly 2 to 3
months.
19. Structure Effectiveness
It can be structured to meet the needs of the entrepreneurs.
It is flexible to suit the entrepreneurs and the financial intermediaries.
To make the issue more attractive the corporate can provide discounts
to the intermediaries who are buying it. This is not possible with the
public issue with stringent rules and regulations.
Access Effective
Through private placement a public limited company listed or unlisted
can mobilize capital. Like-wise issue of all size can be accommodated
through the private placement either small or big where as in the
public issue market.
20. Rights Issue
According to Sec 81 of the Companies Act 1956, if a public company
wants to increase its subscribed capital
by allotment of further shares after two years from the date of its
formation or one year from the date of its first allotment, which ever is
earlier
should offer share at first to the existing share holders in proportion to
the shares held by them at the time of offer.
The shareholders have no legal binding to accept the offer and they have
the right to renounce the offer in favour of any person.
Shares of this type are called right shares.
Generally right shares are offered at a advantageous rate compared with
the market rate.
21. Right issue
According to Section 81, the company has to satisfy certain conditions
to issue right shares.
1. Right shares must be offered to the equity share holders in the
proportion to the capital paid on those shares.
2. A notice should be issued to specify the number of shares issued.
3. The time given to accept the right offer should not be less than 15
days.
4. After the expiry of the time given in the notice, the Board of
Directors has the right to dispose the unsubscribe shares in such a
manner, as they think most beneficial to the company.
22. Book Building
Originally the portion of book building process was available to
companies issuing more than Rs 100 cr. The restriction on the
minimum size was removed and SEBI gave impression to adopt the
book building method to issue of any size.
Book Building may be defined as a process used by companies raising
capital through Public Offerings-both Initial Public Offers (IPOs) and
Follow-on Public Offers (FPOs) to aid price and demand discovery.
It is a mechanism where, during the period for which the book for the
offer is open, the bids are collected from investors at various prices,
which are within the price band specified by the issuer.
The process is directed towards both the institutional investors as well
as the retail investors.
The issue price is determined after the bid closure based on the
demand generated in the process.
23. Book Building Process
1. The Issuer who is planning an offer nominates lead
merchant banker(s) as ‘book runners’.
2. The Issuer specifies the number of securities to be
issued and the price band for the bids.
3. The Issuer also appoints syndicate members with
whom orders are to be placed by the investors.
4. The syndicate members put the orders into an
‘electronic book’. This process is called ‘bidding’ and is
similar to open auction.
5. The book normally remains open for a period of 5
days
24. Process……..
6. Bids have to be entered within the specified price
band.
8. On the close of the book building period, the book
runners evaluate the bids on the basis of the demand
at various price levels.
9. The book runners and the Issuer decide the final
price at which the securities shall be issued.
10. Generally, the number of shares is fixed; the issue
size gets frozen based on the final price per share.
11. Allocation of securities is made to the successful
bidders. The rest bidders get refund orders.
25. Book Building vs. Fixed Price Method:
The main difference between the book building method
and the fixed price method is that in the former, the issue
price to not decided initially. The investors have to bid for
the shares within the price range given. The issue price is
fixed on the basis of demand and supply of the shares.
On the other hand, in the fixed price method, the price is
decided right at the start. Investors cannot choose the
price. They have to buy the shares at the price decided by
the company. In the book building method, the demand is
known every day during the offer period, but in fixed price
method, the demand is known only after the issue close