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Published by: Bond Naveen on Dec 30, 2012
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Initial Public Offering Introduction Why IPO is done SEBI Guidelines for IPO IPO Process Benefits of IPO Recent IPOs in India .

What is IPO ? • IPO stands for Initial Public Offering.  Initial Public Offering refers to the selling of shares by a private company to the public for the first time  This happens in the primary market. The primary market is where a company makes its first contact with the public at large. .

Why IPO is done? • New capital  Almost all companies go public primarily because they need money to expand the business • Future capital  Once public. firms have greater and easier access to capital in the future • Mergers and acquisitions  Its easier for other companies to notice and evaluate a public firm for potential synergies  IPOs are often used to finance acquisitions .

and The issue size.e. either at the time of filing the draft offer document with the Securities and Exchange Board of India (“SEBI”) or at the time of opening of the issue. . the firm allotment and the promoter’s contribution through the offer document. • If the above conditions are not satisfied. 10.. then the IPO can be made only through a book-building process. the offer through the offer document. It must have a pre-issue net worth of not less than Rs. 3. It must have a track record of distributing dividends for at least 3 out of the immediately preceding 5 years. with a minimum net worth to be met during the 2 immediately preceding years.000. i. 2. provided that sixty percent (60%) of the issue size must be allotted to Qualified Institutional Buyers (“QIBs”).000 (Rupees One crore) in 3 out of the preceding 5 years.SEBI Guidelines for IPO 1. should not exceed five times the pre-issue net worth as per the last available audited account.

components of both the methodsfixed price & book building method are considered. In the book building method. . the investors have to bid for shares within a price band specified by the issuer and the final price is decided after observing the result of the bidding In the combination method.IPO Process IPO Process Fixed price method Book building method Combination method In the fixed price method. the price at which the securities are offered is fixed in advance.

the book runners evaluates the price levels • At last the book runners & the issuer decides the final price • Allocation of securities is made to the successful bidders • Rest get refund orders. .The Process of IPO by Book Building Method • • • • • • • Company nominates lead merchant banker(s) as underwriters. Disclose of securities to be issued & price band for bidding Appointment of syndicate members Bidding process Process normally remains for 5 days Bids have to be entered within the specified price band On the closure of the process.

a business can take advantage of new. IPO gives a company fast access to public capital. which can help the investor make a quick profit. IPOs may be undervalued in some cases. larger opportunities and can start working towards incorporation and even worldwide expansion or take their business to another level. This encourages investors to buy IPOs as a profitable investment option. By becoming a publicly traded company. many companies may offer their initial public offering at a low rate. . For the investor. To make IPOs more attractive. IPOs are attractive mainly because they are perceived to be undervalued.Benefits of IPOs For Companies For Investors Stocks and shares are a fast way to raise capital for business expansion and growth.

2012 Dec 11. 2012 Dec 14.98 Dec 03. 2012 Dec 12.to 135/Dec 07. 2012 700/.155.80 609. 2012 125/. 2012 Oct 23.30 539.to 230/Oct 19. 2012 48/. 2012 210/.56 . 2012 225/. 2012 15/- IPO-BB IPO-FP 183.00 Nov 21.to 750/IPO-BB IPO-BB Issuer company Issue open Issue close Offer pice (Rs) Issue type Offer size Crore(Rs) 4.Recent IPOs In India Bharti Infratel Dec 11.to 240/IPO-BB Limited IPO PC Jeweller Ltd IPO Credit Analysis & Research Ltd IPO Veto Switchgears and Cables Ltd IPO Tara Jewels Limited IPO Bronze infratech Ltd IPO Dec 10.49 8. 2012 Nov 23. 2012 Dec 05.to 50/- IPO-BB 25.

Power finance corporation . . BHEL . Tata Steel. ONGC . • Examples :Indian bank .FPO • FPO stands for FOLLOW ON PUBLIC ORDER • An FPO is essentially a stock issue of supplementary shares made by a company that is already publicly listed and has gone through the IPO process.

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