Professional Documents
Culture Documents
(IPO)
Presented By :
Gaurav Kumar Mishra
Deep Chatterjee
Amit Kumar
Kunal Vohra
Manish Shukla
CONTENTS
Classification of Issues
Primary Market / New issue market
Placement of issue
Offer through prospectus
Offer for sale
Private placement
Rights issue
Book building
Red herring prospectus
Pricing of issue
Intermediaries to issue
Lead Manager
Registrar
Bankers to issue
Underwriters
Green Shoe Option
Reliance IPO
Ashoka Buildcon
CLASSIFICATION OF ISSUES
Issues
Public
Rights
Initial Public
Offering (IPO)
Fresh
Issue
Preferential
Follow on Public
Offering (FPO)
Offer for
Sale
Fresh
Issue
Offer for
Sale
Issue Price
Price Band
Floor Price
Cut Off Price
Prospectus
Draft offer document
Abridged Prospectus
Lock-in
Listing of securities
Listing Agreements
De-listing of securities
Investment Banker
Public
Contd.
Advantages for the issuing company
helps the promoters to realize the funds without any loss of
time
the cost of raising funds is reduced - For issuing share cost as
high as 10 percent of the cost of the project
helps the new entrepreneurs, not familiar with the capital
market, to raise adequate capital from the market.
a company with no track record of projects, public issues at a
premium may pose problems
possess low risk to investors since the sponsors have already
held the shares for a certain period
Disadvantage
sell at a hefty premium, manipulation of the results, insider
trading and price rigging
PRICING OF ISSUE
Prior to 1992, governed by Controller of Capital Issues Act 1947
Fixation of a fair price on the basis of the net asset value per
share
Era of free pricing in 1992; SEBI does not play any role in price
fixation
Issuer in consultation with Merchant Banker shall decide the
price
FIXED PRICE - company and LM fix a price
PRICE DISCOVERY THROUGH BOOK BUILDING - company
and LM stipulate a floor price or a price band and leave it to
market forces to determine the final price
At premium Companies are permitted to price their issues at
premium
At par value In certain cases companies are not permitted to
fix their issue prices at premium
INTERMEDIATRIES TO ISSUE
Intermediaries to an issue are:
Merchant Bankers to the issue or Book Running Lead Managers
(BRLM)
Registrars to the issue
Bankers to the issue
Auditors of the company
Underwriters to the issue
Solicitors
Advertising agencies
Financial institutions
Government/ statutory agencies
UNDERWRITERS
Underwriting means they will subscribe to the balance shares if
all the shares offered at the IPO are not picked up
Could be a banker, broker, merchant bankeror financial
institution
Insurance against the possibility of inadequate subscription
Done for a commission
The aspects considered before appointing are
(a) experience in the primary market
(b) past underwriting performance and default
(c) outstanding underwriting commitment
(d) the network of investor clientele of the underwriter and
(e) his overall reputation
Green-shoe Option
An option of allocating shares in excess of the shares included in
the public issue
Post-listing price stabilizing mechanism for a period not
exceeding 30 days through a Stabilizing Agent
Issue would be over allotted to the extent of a maximum of 15%
of the issue size
Provides an investor more probability of getting shares
Post listing price may show relatively more stability as compared
to market.
Issue Close On
Price Band
Face Value
Rs 10 Per Share
Bid Lot
15 Equity Shares
Issue Size
260,000,000 Shares
Retail Size
68,400,000 Shares
Rs 20,000 Million
Rs 22,600 Million
Ashoka Buildcon
Price band fixed between Rs.297 and Rs.324
Wants to raise Rs. 225 Crore from the this IPO
Issue opens on 24/09/2010 and closes on 28/09/2010
It has been subscribed 1.5 times so far, as per NSE website
Received bids for 93.53 lacs equity shares against issue size of
62.19 lacs shares (Excluding 12.43 lacs shares of QIBs)
QIBs buy 12.43 lacs shares at Rs. 324 on 23/09/2010
THANK YOU