IPO

BHAVIN THAKKAR
JIGAR MODY
ANIKET KHOPKAR
 INTRODUCTION
• What is an IPO?

• Why does any company require an IPO?

 Types of Issues
Different Types of Issues :
 Key
Players

Escrow
Account

Red Herring
Prospectus
Book Building
Process
Categories
of Investors

Price Band &

Cut-off Price
 Book Building Process

Public Issue / Offer of securities through

book building process is designed to
ascertain demand for the security at various
prices within a price-band to facilitate
discovery of the issue price.
 Evolution of book building

• Book building, internationally a well-accepted

practice, was introduced in Indian Primary Markets
in 1996
• However, lack of clarify on guidelines kept issuers
away till 1999
• Hughes Software System became the first issuer to
adopt book building in Sept 1999
• 100% book building was introduced in 2001 and
Bharti Televentures IPO was the first case
 KEY PLAYERS

• The Investors

• The Issuer

• Syndicate Members

• Escrow Bankers

• Ad agencies/publicity

• With the support of The stock exchanges &The

Depositories
 INVESTOR
• Who is an Investor?

• Different Types of Investors

 Qualified Institutional Buyers(QIB)
 High Net worth Investor (HNI)
 Retail Individual Investors
 ESCROW ACCOUNT

• Bid amount is called the Margin amount

• The margin amount is kept in a Escrow a/c
• Margin amount comprises of application and refund to
investors
• Instruction given to Escrow bankers for transferring funds
 Red Herring Prospectus
• Dictionary meaning of Red Herring is misleading

• Critical information is not made known

• Based on the offer size : Number of shares on offer

is determined & even the minimum bidding lot
 Exchanges & Depositaries

• National Stock Exchange(NSE)

• Bombay Stock Exchange(BSE)

• NSDL

• CDSL
 Price Band
• What is Price Band?
• How is it determined
• What is floor price
• What is ceiling price
• Price Band to be not more than 20%
• Can be revised – upwards or downwards
 Bidding period
• Minimum of 3 working days
• Maximum of 7 working days
• To be extended by 3 days if price band is
revised
• On line Bidding time 10 AM to 3 PM on all
days except the last day
• On line Bidding time 10AM to 5 PM on the
last day
• Beyond 5 pm only for retail
• For QIB HNI only till 4 PM
 Bidding Centers
• Investors submit bids to the bidding centers listed in
the application form for getting their bids registered

• Mandatory to have all stock exchange centers

• Transaction Registration Slip

 Cut-off price
• Willingness to accept the shares at any price
in the price band
• Required to pay at the top end of the price
band
• Cut off price determined after the bids are
closed
• Cut off price prohibited for QIB and HNI