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This report, as the Title “Initial Public Offers and Due Diligence: The Role of a
Investment Banker”, is an attempt to bring forth the importance of the process of Due Diligence and the significance of the vital role played by the Investment Banker in managing the issue of an Initial Public Offer (IPO). When a Company issues an IPO, it means it is going public. The issue of an IPO introduces a great degree of transparency in a Company’s operations. All the relevant and updated information pertaining to the company is laid down before the investors so that they may make an investment decision. Again, there are set procedures, rules, regulations and laws to be followed in laying down this information before the investors. A document called the ‘Prospectus’ must be prepared. The Prospectus captures all the necessary information that is to be made available to the investors. Apart from the Prospectus, there are various other company documents that need to be verified and summarized in order to present them before the investors. An Investment Banker is appointed for the purpose of managing the issue of an IPO of a Company. The Investment Banker plays a fiduciary role by coordinating the activities of the Company, the Regulatory Bodies, and the Investors. The Investment Banker has responsibilities towards the
Company, to manage the entire process of issue of its IPO, and to present the Investors, to give them all the relevant and updated information on the Company, Regulatory Bodies such as the Securities and Exchange Board of India, to adhere
Company’s information before the investors in a concise and unambiguous form.
while at the same time protecting their interests.
to all secretarial and legal compliance. In order to fulfill all his responsibilities well, the Investment Banker must work diligently. The process through which he verifies and summarizes the Company’s information is thus called the process of Due Diligence. He must issue Due Diligence Certificates at various points during the issue process, saying that the company documents have all been verified and are correct.
This report will take the reader through the entire process of the Issue of an IPO and will lay special emphasis on the dynamic role played by the Investment Banker.
Initial Public Offers and Due Diligence
What is an IPO?
An IPO or an Initial Public Offer is a company's first sale of equity shares to general public. Shares offered in an IPO are often, but not always, those of newly set up companies seeking outside equity capital and a public market for their shares. “An initial public offer is an equity product that allows you to buy cheap tomorrow’s possible winners” -George Mathew An Initial Public Offering (IPO) can be a good investment avenue for equity investors. While the IPO market is dry these days, a fresh crop is expected soon. Let us take five minutes to understand IPOs and to decide whether to invest in them or not. Suppose your friend owns a business, his company is profitable and he wants to grow the company faster. For this he needs money. Instead of debt, he wants to offer a part of his company for sale in the stock market. He will make, what is called, a ‘public offer’ of shares (after a number of procedures and regulatory processes). If the issue is successful, his company will ‘list’ or begin to trade in a stock exchange. So, an IPO is a fresh offer, where a company that is not yet trading, wants to sell shares directly to the investors. The shares can be offered ‘at par’, that is, at face value of Rs 2 Rs 5 or Rs 10, or at a premium. After this, your friend is no longer the only owner but will have ‘diluted’ his share. The ‘owners’ of the company may now be thousands of people he may not even know. Yet, if he holds the majority shares, he will still take all the decisions about the company. All the share holders are now entitled to vote, may get dividends and bonuses. They also have the option to exit from the shares by selling their stock in the secondary market, making a capital appreciation or loss as the price changes from the issue price.
Initial Public Offers and Due Diligence
Why may a Company need an IPO?
To meet short-term requirements, the company may approach banks, lenders or may even accept fixed deposits from the public/shareholders. To meet its long-term requirements, funds can be raised either through loan from lenders, Banks, Institutions etc., (which carry financial burden) or through the issue of capital. Capital can be raised through private placement of shares, public issue, rights issue, etc. Public Issue means raising funds from the public. Promoters of the company may have plans for the company that may require infusion of money. The main purpose of the public issue, amongst others, is to raise money through the public and to get its shares listed at any of the recognized stock exchanges in India. The following may be some other reasons for a company to go public: Raising funds to finance capital expenditure programs like expansion, Financing of increased working capital requirements; Financing acquisitions like a manufacturing unit, brand acquisitions, tender Debt financing ; Exit route for exiting investors. An IPO has two sides to it, consisting of advantages and disadvantages. Moreover, it needs to be balanced, and this is done by the Regulatory Bodies such as The Securities and Exchange Board of India (SEBI), so that it does not fall on one side. Due to this property of an IPO, it has been referred to as a “Coin” in this report.
diversification, modernization, etc;
offers for shares of another firm, etc;
Initial Public Offers and Due Diligence What are the two sides of IPO coin? Advantages • • Money non-refundable except in the No financial burden i. exchanges company & its products / services. 1956 SEBI Rules & Regulations Compliance to the Listing Agreement with the concerned stock exchanges after the listing of securities. company performs well Disadvantages • Time consuming process • Expensive • Several Legal formalities. in order to service the equity. no fixed rate of case of winding up or buy back of shares interest payable. . 1956 Securities Contracts (Regulations) Act. • • • • • Enhances shareholder's value if the Greater Transferability Trading & Listing of securities at stock Better Liquidity of securities Helps building reputation of promoters. However. provided the company performs well How is the “coin” made to balance (Controls)? Applicable Laws A Company is required to comply with the following laws in connection with a public issue: Provisions of The Companies Act. dividend may be paid. • Involvement of many intermediaries • Transparency Requirements and public disclosure of information may lead to lack of privacy • Continuous Compliance of provisions of listing agreement and other legal requirements • Constant scrutiny of performance by investors • May lead to takeover of the company • Securities of the company may be made subjective to speculative attacks.e.
And Minimum post-issue face value capital of the Company shall be Rs. 10 crores Or Compulsory market making for 2 years . of which at least 10% should come from the appraiser(s) and additionally allocation of at least 10% to QIBs. 3 crores in each of the preceding 3 full years (of 12 months each). with compulsory allocation of at least 50% to QIBs Or At least 15% participation in project by FIs/banks. 1 crores in each of the preceding 3 full years (of 12 months each) Issue size + previous issue in current FY is lesser than 5 times pre-issue net worth Yes Fixed Price or Book building (no minimum allocation to QIBs) No Only Book building. If more than 50% is held in monetary assets.Yes Initial Public Offers and Due Diligence RBI regulations in case of foreign/NRIs equity participation. the company should have firm commitments to deploy such excess in its business/project Track record of distributable profits in for 3 out of preceding 5 years Net Worth of at least Rs. Who can “Toss the IPO Coin”? Eligibility Criteria for Public Issuance of Securities Net Tangible Assets of at least Rs. of which not more than 50% is held in monetary assets.
the above additional conditions are not applicable . and The issue is made only through book building method with allocation of 60% of the issue size to the qualified institutional buyers as specified by the Securities and Exchange Board of India Yes Offer at least 10% of each class of securities issued can be offered to the public for subscription No Offer at least 25% Of each class or kind of securities to the public for subscription In case of more than 25% dilution.Initial Public Offers and Due Diligence Eligibility Criteria for Public Issuance of Securities (Contd) Minimum 2. The size of the offer is minimum Rs1.0bn. firm allotment and promoters’ contribu1ion) is offered to the public.0mn securities (excluding reservations.
transparently and economically in the better interests of both the issuers and the investors. companies issuing shares are free to fix the premium. provided adequate disclosure is made in the offer documents. SEBI has been instrumental in bringing greater transparency in capital issues.Initial Public Offers and Due Diligence The Regulatory Framework Up to 1992. The following are the intermediaries who have to be registered with SEBI and must have a valid certificate from SEBI to act as intermediaries: - . There must be proper regulation and code of conduct and fair practice by intermediaries to make them competitive and professional. the Controller of Capital Issue (CCI) formed under the Capital Issues Control Act controlled the capital primary market. Under the umbrella of SEBI. SEBI has become a vigilant watchdog. 1992 and with its establishment. investors must be protected from unethical practices and their rights must be safeguarded so that there is a steady flow of savings into the market.The SEBI Act came into force on 30 th January. Since its formation. The greater focus being investor protection. SEBI – The Regulatory Body SEBI was formed to promote fair dealing in issue of securities and to ensure that the capital markets function efficiently. The premium on issue of equity shares issued through the primary markets was done in accordance with the Capital Issues Control Act. The CCI guidelines were abolished with the introduction of Securities & Exchange Board of India (SEBI) . At the same time. The promoters should be able to raise funds at a relatively low cost. all public issues are governed by the rules & regulations issued by SEBI. Role of Intermediaries Many intermediaries are involved in connection with the public issue.
Before the opening of the Issue. Investment Bankers also have to verify the correctness and propriety of all the information provided in the prospectus. but also to the investors. they must arrive at a valid basis of allotment of shares among the applicants. and the valid ones considered. It is mandatory for them to carry out Due Diligence for all the information provided in the prospectus and they must issue a certificate to this effect to SEBI. decisions such as who will be the underwriter and what amount can be underwritten have to be taken. Invalid applications have to be rejected.Initial Public Offers and Due Diligence • • • • • • Investment Bankers Registrar and Share Transfer Agents Bankers to the Issue Underwriters Stock Brokers and Sub Brokers Depositories Investment Bankers play the most vital role amongst all intermediaries. They assist the company right from preparing the prospectus to the listing of securities at the stock exchanges. the Client Company and the investors. . In such cases. They handle the dispatch of share certificates and refund orders. In case there is under subscription. This information must be disclosed to not only the Regulatory Framework. A Company may appoint more than one Investment Banker provided Inter-Se Allocation of Responsibilities between the Investment Bankers is properly structured. underwriters subscribe to the unsubscribed amount so that the issue is successful. Investment Bankers play a fiduciary role between SEBI. Registrar & Share Transfer Agents processes all applications received from the public. Underwriters are those intermediaries who underwrite the securities offered to the public. At times. there may be an oversubscription.
through their contacts. These applications are then forwarded to the Registrar and Share Transfer Agent for further processing. . Depositories are the intermediaries who hold securities in dematerialized form on behalf of the shareholders. The stockbrokers and Sub Brokers play an important part in the distribution of shares to the public. The intermediaries. and need to also be informed about the company and its performance. Stock Brokers & Sub-Brokers are those intermediaries who. invite the public for subscribing shares for which they get commission. SEBI lays down guidelines and regulations for all the above intermediaries. The main purpose is to maintain discipline and transparency in the Issue Process. are bound to adhere to the guidelines and rules put down by SEBI. in turn.Initial Public Offers and Due Diligence Bankers to the Issue are banks that accept application from the public on behalf of the company.
Moreover. but rather through just being excellent at his job. The Investment Banker has a fiduciary role in relation to the investors. the only way for him to strive to stay in the competition and be among the best is neither through great innovations or entrancing creativity. He has to ensure that only quality paper emanates from his . Therefore. Interest Protectn. and other regulatory bodies.Initial Public Offers and Due Diligence The Investment Banker Enters The Investment Banker must prove his competence to his clients and show his areas of core competency to attract clients. The Investment Banker plays a vital role in channeling the financial surplus of the society into productive investment avenues. The Government. The Companies Act. The following illustration is an attempt to depict the role of an Investment Banker: REGULATORY BODIES Compliance to Regulatory Framework ISSUER INVESTMEN T BANKER INVESTO R Capital Market Info. he must do so while adhering to the strict regulatory framework put down by SEBI.
He is required to exercise due diligence to ensure the adequacy and appropriateness of the disclosures made in offer document. etc.Initial Public Offers and Due Diligence firm. Profit and Loss Accounts. An Investment Banker should not carry on any business other than that in the securities market. liabilities and obligations relating to such issue and in particular to disclosures. The Investment Banker has to ensure the compliance of all the laws and regulations governing the securities market. The Investment Banker is the leader among all the intermediaries associated with the issue. allotment and refund. Advertising Agency. General Obligations and Responsibilities The Investment Banker must meet the following general obligations and responsibilities: SEBI1. records and documents. This must be done so that SEBI can monitor the capital adequacy of the Investment Banker. Printers. He may also be called upon to assist the statutory authorities in developing a regulatory framework for the orderly growth of capital markets. Banker to issue. This must also be easily accessible to SEBI. This includes the balance sheets. Every Investment Banker must abide by the code of conduct as specified by All issues should be managed by at least one Investment banker functioning as Every lead Investment banker must enter into an agreement with his client the lead Investment banker. Every Investment Banker must maintain his own books of accounts. before taking up the assignment relating to an issue. He is required to guide and co-ordinate the activities of the Registrar to the issue. etc. Brokers. Statements of Financial Position. Copy of Auditor’s Report. 1 . An exception to this rule is a bank or a public financial institution that has been granted a certificate of registration under these regulations. Underwriters. company and other Investment Bankers setting out their mutual rights.
of Investment bankers Two . 100200 Crores Betwe en Rs. 200400 Crores Above Rs. 50100 Crores Betwe en Rs. 400 Crores Five or more as may be agreed by SEBI Five Four Three No.Initial Public Offers and Due Diligence Size of Issue Less than Rs. 50 Crores Betwe en Rs.
of the prospectus in respect of an issue and the reasonableness of the views expressed therein. the responsibilities of each such Investment Banker must be clearly demarcated and a statement furnished to SEBI. without registration under SEBI. who is responsible for verification of the contents Corporate.Initial Public Offers and Due Diligence Where there are more than one lead Investment Banker to the issue. . a Due Diligence Certificate. must submit to SEBI at least two weeks prior to the opening of the issue for subscription. some cases. A Lead Investment Banker cannot manage the issue of any associated Body A Lead Investment Banker cannot associate with any other Investment Banker The Investment Banker may even have to accept Underwriting obligations in The lead Investment banker.
The above obligations and responsibilities may be considered as constraints within which the Investment Banker must operate. . securities in respect of any issue must continue to be associated with the issue till the subscribers have received the share certificates or refund of excess application money. Corporate governance. the Draft The lead manager undertaking the responsibility for refunds or allotment of Prospectus and any other literature intended to be circulated among the shareholders. Financial statements. from the Investment Banker’s point of view. The Procedure for the Issue of an IPO Many of these steps can be undertaken prior to formal launch of the offering and filing of the offer document with SEBI and other regulators Preparing for IPO. Review business plan. Capital structuring. the Investment Banker’s objective function becomes that of maximizing the benefit derived by the Client Company and the investors out of the Issue. Keeping these constraints in mind. The next chapter will explain the procedure involved in managing the Issue of an IPO. Initiate research.Initial Public Offers and Due Diligence The Lead Investment Banker must submit the Particulars of the Issue.
Road shows. Launch IPO File with SEBI.Initial Public Offers and Due Diligence Due diligence. all being non-executive composition to reflect public Company should adopt best corporate governance practices to assist Investors directors. director having financial & executive directors to accounting knowledge constitute at least 50% (If the Board of Directors Committees Remuneration committee chairman of the board is an to determine the Company’s executive director then the policy on specific board should have at least 50% remuneration packages for independent directors or else at executive directors least 1/3rd) Investor Grievance committee Company would have to ramp up Secretarial and Compliance teams Change Board Preparing for IPOinRegulatory - . Management discussion. Research briefings. Audit committee of at least 3. These have to be compliedleast before independent & at with 1 Increase listing. Exemptions and approvals. Offer document. Statutory disclosures. Business and legal due diligence. Re-stated audited financials. Business overview. with majority being shareholders’ interest appreciate greaternumber of nontransparency and disclosure. Pre-issue marketing. Meeting with institutional investors. Corporate publicity.
Initial Public Offers and Due Diligence Preparing for IPO – Financial Statements SEBI Guidelines require disclosure of previous five years Audit qualifications for all non-standard accounting practices. book value. failure to make provisions or other adjustments accounts after making the following adjustments: Prior period items Changes in accounting policies or incorrect accounting policy All financial information (EPS. etc.) presented in the Offer Document should be based on the adjusted accounts .
segmental reporting. Complete disclosure will be required regarding joint ventures and foreign operations along with the Annual Report statement and statement of tax benefits have to be certified by the auditors accounts Preparing for IPO – Capital Structuring Bonus issue of shares Split face value of shares SEBI Guidelines require Examine need for corporate action to arrive at optimal capital structure and attractive issue price No outstanding convertible instruments/ securities . capitalization Matters which needs to be addressed while re-stating Accounting for deferred taxed.Initial Public Offers and Due Diligence The above accounts have to be certified by the auditors Management Discussion and Analysis Report (MD&A) Besides the accounts the financial ratios.
Initial Public Offers and Due Diligence
No partly paid shares Recent amendments to the DIP guidelines - In case of
initial public offer by an unlisted company,
If the issue price is Rs 500/- or more, the issuer company shall have a discretion to fix the face value below Rs. 10/- per share subject to the condition that the face value shall in no case be Less than Rs. 1 per share. If issue price is less than Rs 500 per share, the face value shall be Rs. 10/- per share.
Comparison of Fixed Price V/s Book Building
Methodology Fixed Price Route Book Building Route Easy to understand for retail Relatively difficult to understand for investors retail investors. Book building is preferred by institutional investors (especially FIIs, Mutual Funds) Limited flexibility because price Greater flexibility as pricing is done band is pre-determined at least 2 closer to the issue opening date months in advance Limited flexibility partially
Initial Public Offers and Due Diligence
compensated by offering higher discount to market price Indicative price No maximum or cap has to be Price band consisting of Floor and determined Cap (Floor + 20%) has to be determined Reservation for 50% of the issue has to be reserved 25% of the issue has to be reserved. small investors Additional shares can be allotted out (<=1,000 of the QIB portion shares) Decision Investor does not have to make the Investor needs to decide the bid price. making by decision regarding the price This may be difficult for certain investor institutional investors like PSU banks, insurance companies and nonprofessional investors like corporate investors Track record Method has been successfully used Typically used for issues with a in IPOs as well as issues by minimum size of Rs500-600mn existing listed companies Investor Reach Banks operate as collection centers Investor reach is relatively limited and hence investor reach is because broker terminals are required significantly enhanced Institutional Low because the entire application High because bids are not Participation amount has to be paid upfront and accompanied by funds; payment to be locked up for 30 days made just for the allocated amount
Investment banker Assist in appointment of all intermediaries Detailed valuation and advice on pricing Conduct due diligence and finalize disclosure in offering documents Assist in drafting of Prospectus
Initial Public Offers and Due Diligence
Prepare company presentations for analysts, syndicate sales force, road show and other meetings; publish research reports Coordinate with syndicate on publication of research reports Prepare and implement marketing strategy Pre-marketing; Arrangements for road show / investor meetings and presentations Distribution / selling of the issue Interface compliance with SEBI / Stock Exchange / other legal authorities for the domestic offer Co-ordination with retail brokers Allocation of shares post-issuance Co-ordination for listing and other post-issue formalities Overall Issue Co-ordination Legal counsel
Legal due diligence Drafting the Offer Document Advising research, guidelines, etc. Advice on syndicate agreement, underwriting agreement Ensuring overall compliance with regulatory guidelines
Accountants / auditors Reviewing and auditing financials and preparing financial statements as per DIP Guidelines for inclusion in the Prospectus Registrar
Receiving applications from
Reconciliation of the cheques deposits with the applications received by the Registrar Issue Provisional and Final certificates PR agency Advising the Company and Investment Banks on formulation and Assisting the Company and Investment Banks for statutory Organizing the Road Shows Ensure adequate coverage of IPO and positive news flow execution of the Media and PR Strategy advertisements . Stock exchanges Printers Bulk printing of Ensuring timely the Red Herring prospectus and application forms dispatch and distribution of stationery to all centers Bankers Managing the logistics of depositing the application. book and bankers’ statements Company and the Bankers regarding collections. dispatch of shares Securing allocation approval from application forms.Initial Public Offers and Due Diligence Managing data on applications received and working with the Company and Investment Banks to identify successful shareholders Reconciliation between Co-coordinating with the Refunds.
Initial Public Offers and Due Diligence Due Diligence – Process Overview The process involves understanding the gamut of the company’s operations. regulations. litigations Risk factors associated with the company and the external environment Analysis of applicable regulations like FDI/FII. etc Business activities past performance financial results Industry background. . Approvals. experience. compliance with procedures and guidelines and presenting a fair picture to investors. competition & business environment Description of the company’s business Financial performance for the last five years Objects of the issue Future plans and strategy of the company Management’s discussion and analysis of the financial results Material contracts agreements Enabling provisions of MoA & AoA for allowed lines of business Letters of Contract with each member of the issue management team Loan agreements & sanction letters with FIs/ Banks Deeds of hypothecation executed in favor of the lenders Underwriting agreements Agreement with the KMP Purchase order with major suppliers All utilities contracts & permissions Syndicate & Escrow agreement Promoters & Management Quality. qualifications. composition of Board of Directors Quality of human resources Details of KM. reporting structures.
and general & statutory information Issue structure Capital structure of the company Terms and conditions governing the instruments being issued Operating details Information gathered during the Due Diligence process Highlight the company's strengths and operations General and statutory information Description on the basis of allotment Auditors report Extracts of the Articles of Association List of Material Contracts and Documents . covering three sections issue structure. operating details.Initial Public Offers and Due Diligence Offer Document – Three Distinct Sections Formally divided into Part I & II as per Companies Act format.
Initial Public Offers and Due Diligence Reservations and Firm Allotment Reservations can be made for the following investors Permanent employees (not exceeding 10% of the issue) Indian Mutual Funds Foreign Institutional Investors NRI investors Indian and Multilateral Development Financial Institutions Scheduled Banks Firm allotment can be made to the following investors Permanent employees (not exceeding 10% of the issue) Indian Mutual Funds Foreign Institutional Investors NRI investors Indian and Multilateral Scheduled Banks Development Financial Institutions IMPORTANT NOTES TO REMEMBER Firm allotment can be made at a price higher than the issue price Firm allotments are locked in for one year Persons to whom firm allotment has been made cannot apply in the portion for the public Category of investors for whom reservation has been made cannot apply in the portion for the public Above mentioned condition is not applicable to employees .
and a floppy containing the Draft Prospectus.IB representative submits 10 Copies of the Draft Prospectus to SE’s where listing is sought. Submission of complaints / material changes report A complaint / material changes report is submitted by the IB Representative to SEBI. MOU. the Inter Se Certificate. from public/institutions and the amendments to be made in the Draft Prospectus. IB representative to SEBI covering all the observations within the stipulated time submits a reply. Filing of the prospectus with SEBI along with due-diligence certificate and SE's (only draft prospectus) 10 Copies of the Draft Prospectus. Receipt of SEBI card All the observations given by SEBI are incorporated and the final prospectus is filed to SEBI. 21 days after filing of the Draft Prospectus. A copy of the draft prospectus is filed along with a request letter from the Company for Demat of shares to both NSDL & CDSL. stating the complaints received. Replying to all observations On receipt of observations from SEBI. Filing Fee and a Due-Diligence Certificate is submitted to the Regional SEBI Office / SEBI Mumbai (as the case may be). wherever submitted. The final decision for selection will rest with the Issuer Company. if any. An acknowledgment is obtained from the SEBI Office.Initial Public Offers and Due Diligence NOTE: The Investment Banker Representative only has an advisory role in selection of the above intermediaries. Underwriting of the issue .
Initial Public Offers and Due Diligence On receipt of SEBI Card. the IB In charge in consultation with the Company finalizes the underwriting amount. Filing of material documents with ROC: On finalization of underwriters to the issue by IB representative. all material documents as mentioned in the Prospectus along with a copy of the Prospectus duly signed by the Board of Directors (of the Issuer Company) are filed with ROC. Filing of Final Draft Prospectus The Final Draft Prospectus is filed to SEBI after incorporating all the observations as specified in the acknowledgment card before filing with ROC.Diligence Certificate is filed with SEBI by IB Representative on filing of guidelines. Preparation of Application Form Issue Application Form is prepared as per the Ministry of Finance and SEBI . if the company intends to get its issue underwritten the following documents are sent to the Brokers/Investment Bankers by the IB Representatives inviting them to participate in the underwriting: Draft prospectus Underwriting agreements Performa for devolvement made by the Underwriters (if any) Certificate regarding the net worth of the Underwriters Consent letter to act as Brokers to the issue Finalization of underwriting (confirmation letter ) On receipt of underwriting confirmations. Filing of Due-Diligence Certificate with SEBI prospectus to ROC. A Due .
A distribution schedule is prepared by the IB Representative for dispatch of Issue Application Forms and Prospectus to Brokers. Investment Bankers etc. Filing of the Auditor's Certificate regarding receipt of promoter's contribution. Preparation of distribution schedule for dispatch of Issues Applications Forms & Prospectus.Initial Public Offers and Due Diligence Printing of Share Application Forms and Prospectus. Advertisement agency. and Bankers to the issue. . confirming the receipt of promoter's contribution. Underwriters. at least 10 days before the opening of the issue. A Due . is filed with SEBI and SE's (where listing is sought) by the Issuer Company. Submission of printed copies of Prospectus to SEBI IB representative submits 5 printed copies of prospectus to SEBI Regional and Mumbai offices. IB representative makes all necessary arrangements for opening of issue. SEs. On receipt of the ROC card the IB Representative arranges for the Issue Application Forms and Prospectus to be printed. at least one day before the opening of the issue. Filing of the Due-Diligence Certificate with SEBI. IB representative ensures that Auditor's certificate. He also ensures that 1% of the issue amount is deposited with Regional Stock Exchange at least one day before the opening of the issue by the Issuer Company.Diligence Certificate is filed with SEBI by IB representative before the opening of the issue informing that no corrective action is required. Arranging for the Opening of the Issue. giving the detailed list of Promoter's group.
If the issue is still unsubscribed. before the devolvement notices are served to the underwriters of the issue. Post-Issue Monitoring Reports. IB representative assists the issuer company in completing the listing formalities by referring to the checklist of documents to be filed with the stock exchanges for listing securities in case of public issues. .Day Compliance Report with SEBI IB representative files a 78-Day Compliance Report with SEBI Assisting the Issuer Company in completion of listing formalities Whenever and wherever required. it is kept open for a total period of 10 working days. the Due Diligence. Filing of 78. The next few chapters will focus on some key points such as the Prospectus. Filing of 3. The above procedure brings out the involvement of the Investment banker in the Issue Process.Day Compliance Report with SEBI IB representative files a 3-Day Compliance Report with SEBI. Closure of issue On receipt of 90 % subscription (as per the details provided by Bankers to the issues and Registrar's to the issue) the issue is closed on the earliest closing date. if any. and so on.Initial Public Offers and Due Diligence SEBI: Filing of Final Compliance Certificate with A Final Compliance Certificate is filed with SEBI before the closure of issue.
terms of the present issue. . a body corporate. group companies. `Prospectus’ means any document described or issued as a prospectus and includes any notice. particulars of the issue etc. details of the proposed project. There may be two kinds of Prospectus: • An Ordinary Prospectus is a formal written offer to sell securities that provides an investor with the necessary information to make an informed decision. Pursuant to Section 2(36) of The Companies Act. or debentures of. where the investors know the Price of the IPO beforehand. The Prospectus is a document by way of which the investor gets all the information pertaining to the company in which he is going to invest. The next chapter explains the Prospectus in detail. It explains a proposed or existing business enterprise and must disclose any material risks and information according to the securities laws. capital structure. It is used in case of an IPO Issue under the Fixed. The Prospectus The `Prospectus’ is the most important document for the company to come out with a public issue. its promoters and directors. It gives the detailed information about the company. The importance of the Prospectus must therefore be understood. advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in. The purpose of the Prospectus is to provide all the necessary and true information to investors about a Company in order to enable him to make an investment decision. circular. so that the reader may understand its significance and purpose.Price Process.Initial Public Offers and Due Diligence The Investment Banker must work diligently in order to ensure that all relevant and updated information is captured aptly and truly in the Prospectus.
that information in the document is incomplete or subject to change before the issue. Presently. 20 crores. These are included in Schedule II of the Companies Act. • The Prospectus is also to be filed with the concerned Stock Exchanges along with the application for listing of securities. • If the issue size is upto Rs. There are certain mandatory disclosures that have to be made in the prospectus. Guidelines. 2000 give details about the contents of prospectus Vetting by SEBI/Stock Exchanges • A Company cannot come out with public issue unless a Draft Prospectus is filed with SEBI. 20 crores. printed in red. the Investment Bankers is required to file the Prospectus with the regional office of SEBI falling under the jurisdiction in which the registered office of the Company is situated. It is used in the case of an IPO issue under the book-building process. the Investment Banker along with the Due Diligence Certificate and other compliance sends the same to SEBI for vetting • SEBI on receiving the same scrutinizes it and may suggest changes within 21 days of receipt of the Prospectus. If the issue size is more than Rs. Mumbai office. It receives its name from the warning. where applicants are to bid for the IPOs. • A Company cannot file the Prospectus directly with SEBI.Initial Public Offers and Due Diligence • A Red Herring Prospectus is a preliminary prospectus issued by underwriters or issuers to gauge interest in a prospective offering. SEBI (Disclosure and Investor Protection). Companies approaching the Stock Exchange for public issues should obtain In-Principal Approval from such Stock Exchanges. It has to be filed through an Investment Banker. Moreover. Investment bankers are required to file prospectus at SEBI. After the preparation of the Prospectus. It relates to a registration statement filed with the Securities and Exchange Board of India that has not yet become effective. 1956. .
as recommended by SEBI / Stock Exchanges. along with telephone fax number and E-mail address. the Various Undertakings by the Company and its Board of Directors. The ROC may suggest changes which should also be reported to SEBI / Stock Exchanges. Investment Banker. the final Prospectus. The date on which ROC Card is obtained is the date of the prospectus. The word "Prospectus". the Stock Exchanges. Contents of the Prospectus • • • • Clauses. intermediaries involved in the Issue. • • • • • • • • • Issuer’s Absolute Responsibility Clause. if any. to handle these factors thereof. Various Disclaimer Clauses of the SEBI. duly signed by all the Directors must be filed with the Registrar of Companies (ROC) along with the copy of all material documents. Risk in Relation to First Issue and General Risk of Investment of the company. Listing with the Stock Exchanges.Initial Public Offers and Due Diligence Date of Prospectus and ROC Card After making changes. and the Company. The names and address of the Investment bankers. Government Approvals and Filing. number. Risk Factors associated with the Issue and Management Perception Information on various transactions by the issuer Company. The name of the Issuer Company and address of the registered office The nature. and other The Issue Opening and Closing Dates. . price and amount of the instruments offered.
The Prospectus is prepared after much verification and clarification between the Client Company. The next chapter explains the concept of Due Diligence in detail. . Basis of the Issue Price. complete with the Auditor’s Report. Details on Promoters and their Background. Details of project cost and means of financing the project. Outstanding litigation. market Details of existing facilities. the Regulatory Bodies and the Investment Banker. Instructions to investors on who can apply and how to apply. position. The contents of the Prospectus must be reliable and relevant. Basis of Allotment of Shares. Shareholding Pattern. adverse events and material Material contracts and Inspection of Documents. The Investment Banker performs Due Diligence in order to ensure this and Issues Certificates of Due Diligence at various stages. etc. Information on the utilization of Issue Proceeds.Initial Public Offers and Due Diligence • • • • • • • • • • • • • • • Credit Rating. developments. Statutory and other Information. Full Financial Details and Financial Statements for last five years. Full details on the Capital Structure of the Company and Terms of the Offer and Rights of Shareholders. defaults. History of the Company and details on its present business.
This is why the Prospectus is aimed at revealing every detail about the company. The Investment Banker must perform a fiduciary role by balancing the interests of the investors. It involves the verification of various documents provided by the Client Company. he must perform DUE DILIGENCE. summarized. An Investment Banker is thus appointed for managing the process for the issue of IPOs.g. SEBI). The information and calculations in these documents need to be checked. Within these constraints. which is making sure that all relevant and updated information of the Client Company is captured in the Prospectus. which could have an impact on the investor’s decision. The process of Due Diligence is a time-consuming one and it involves a number of mental efforts.. the client companies and the regulatory bodies (e. modified and updated so that it may be accurately stated in .Initial Public Offers and Due Diligence Due Diligence A Company that wants to issue IPOs needs to first gets listed. Several other formalities are also involved in the entire process of issuing IPOs. This is because the Prospectus is the main document that an investor would go through while deciding on whether to invest in a company. all at once.
it is passed on to the Prospectus. Any wrong inaccurate information needs to be identified and corrected by the Investment Banker. in order to give an idea about the success of the company.Initial Public Offers and Due Diligence the Prospectus. and its norms. The following are some details that need to be scrutinized for a typical client company: 1. the risk attached to it. regarding the achievements and milestones attained. Project Details: . and so on. Various clearances and approvals also need to be looked into in order to be sure that the company has been carrying on a fully legal and approved business. This could ultimately put the Investment Banker’s reputation and license at stake in extreme cases. 2. In order to ensure a flawless Prospectus. the Investment Banker must therefore work diligently and skeptically. Further details may be provided. The present business of the company gives investors an idea on the risk attached. All relevant details about the client must be backed with supporting evidence. rules and regulations. These documents need to be checked in order to get a good picture about the kind of business the company is engaged in. If left uncorrected. conversion to Public Limited Company. 3. and the procedures followed by it. its business. General: The MOA and AOA provide information on the company. Company Details: A brief history of the company gives an insight into the changes in office addresses.
Initial Public Offers and Due Diligence Full project details give the investor a chance to determine the viability of the very project for which the company is issuing IPOs. Directors: The Directors of the company must also have a good reputation and must be capable enough to run the company. Project Appraisal Report. their age. technology to be adopted. the other ventures that they may be promoting and the number of shares held by them need to be known. Also. Project cost estimates. and also to know the external factors that may affect its performance. 4. Auditors: The names and addresses of the Auditors and any changes in Auditors need to be disclosed. An overview of the industry in which it operates is also needed in order to judge the present and future performance of the company. 5. A SWOT Analysis of the company and the industry in which it is operating also illustrates the areas that it can exploit and the ones that it is vulnerable to. Their brief bio-data must be disclosed and any changes in directors. qualifications and work experience have to be revealed. Any unusual events and future anticipated changes must also be brought to the attention of the investors. in order to know the promoters’ share in the control of the company and their ownership stake. The Auditors employed must have a good recognition in the . 6. Promoters: The promoters’ reputation and capability affects the success of the company. Therefore. and other such statements enable the investor to decipher the potential of a particular project. details of other directorships and details of remuneration must be known.
Plant & Machinery: The entire details on the availability of raw material. Also. The disclosures on input and output are needed so that any future scarcity or unfavorable events that may affect the company can be anticipated. Marketing: Existing competition and the proposed marketing strategy should be effectively summarized so that the standing of the company in the market is brought out.Initial Public Offers and Due Diligence market and must be of repute. In turn. Product Details. Raw Materials. This information illustrates the performance of the product in the market and the profit the company would be expected to make. 8. 10. approvals and even the method of manufacture of the product need to be disclosed. Companies under the same management: Details such as names and addresses of companies under the same management and details of the capital issue made by them during the last three years need to be furnished. price trend and relative market position must be captured aptly. The description of the product itself. 9. 7. its market demand scenario. existing cost of Plant & Machinery. technology used to make the product. The chances of a successful performance can also be brought out from this information. import of raw material. They must be known to be accurate in their work. non-payments or pending disputes are likely to affect the finances and operations of the company. any particulars of strikes/ lockouts or any . they affect the investor’s decision since he may not be willing to take the risk of investing in a company with too much outstanding litigation. Outstanding Litigation: Criminal prosecution.
and for its subsidiaries. 13. Civil Work and Assets: Land may have been leased. Land. 12. 14. Such details are necessary since the performance of a company under the same management can be used as a parameter to predict the performance of the concerned company. Bankers. Supporting papers for all such agreements need to be scrutinized and the terms and conditions weighed. as security must also be disclosed. Lead Managers. It is on this basis that one can see if the company is doing well in the market. etc. for the last five years. have to be provided for the company. Any change in assets must also be mentioned. 11. The corresponding Sanction Letters. etc. Capitalization Statements. Tax Shelter Statements. The Auditor’s Certificate regarding the financial statements is also needed. Consents: Consent Letters from Auditors. The Balance Sheet. Promise vs. what its . Financial Information: The performance of the company in the past has to be evaluated on the basis of financial figures. Company Secretary. need to be obtained to act in their capacity. Financial Assistance: Applications made by the company to Banks/ Financial Institutions must be checked. architects and contractors may have been appointed. Principle terms of the loan and assets charged. whether it is healthy. for the last three years.Initial Public Offers and Due Diligence form of labor unrest should be specified. Key Accounting Ratios. Legal Advisors. Profit & Loss Account. Performance should also be given.
etc. Nature. and so on. In brief. It also contains all the necessary details about the denomination in which shares will be issued. Notes on Corporate Governance. These calculations form the crucial crux of the investor’s decision.Initial Public Offers and Due Diligence credit worthiness is how its profitability is. mode of payment. Miscellaneous: Notes on Investor Grievances and Redressed. The Application Form must contain Undertakings by Investors about their acceptance of the Terms of the Offer. The Investor may apply for an IPO anytime between the Opening and the Closing of the Issue. and is thus justified in laying down the Disclosure and Investor Protection Guidelines for any Public Issue. The above disclosures need to be made in order to open up the information on the company before the investors. telephone number. Amalgamations/ Mergers need to be additionally provided. price and amount of the issue. The Investment Banker’s duty is to follow these Guidelines and to perform Due Diligence. 15. the main contents of an Application Form are as follows: • Name of the Issuer Company along with registered office address. and fax and email id. the decision of the Board of Directors. Offer Opening and Closing Dates. The Application Form The Application Form is an Instrument whereby investors can apply for an IPO. numbers. SEBI is a ‘vigilant watchdog’ for the protection of the investors’ interests. An investor’s signature on an Application Form means that he has gone through the Prospectus of the Company and that he would like to be registered as the holder of Equity Shares that would be allocated to him. • • . etc. minimum subscription. so that the investors are given a Prospectus that they can rely on and make a suitable investment decision.
Irrespective of the level of subscription. Details of Nominee. Applicant’s Depository Account details. Father’s/Husband’s Name. Company. Sub-Broker. Body Corporate. The main purpose of the Application Form is to remind Investors once again about the contents and position of the Issuer Company. Minimum Subscription and other instructions for payment.Initial Public Offers and Due Diligence • Broker. • • • • Applicant’s PAN/ GIR No. the Investment Banker must ensure the submission of the Post-Issue Monitoring Reports as specified by SEBI. Any details that are left unfilled or incorrectly filled can make the Form liable to be rejected. if any. Status (whether Individual. DIP Guidelines. according to the Basis of Allotment. Bank or Other) and Occupation. Bank’s Counterfoil details. An Abridged Prospectus of the Issuer Company which contains all details of the Prospectus in brief. NRI. Applicant’s details on address. The Registrar of Companies (ROC) receives all Application Forms where the Basis of Allotment is also decided. There are mainly two Post-Issue monitoring Reports: . • • • Particulars. as specified by the SEBI DIP Guidelines. and to take all the investors’ details required for the allotment of shares. Bank and Codes. Therefore the applicant must also go through the Checklist provided in the Application Form in order to ensure that the Form has been correctly filled. Age. The Application Forms are processed to arrive at the number of shares to be allotted to the applicants. Bank Branch and Registrar’s respective Stamps Applicant’s undertaking. The Post-Issue Monitoring Reports The Investment Banker’s Obligations do not end with the closure of the Issue of the IPO.
Actual Closing date. Face Value and Premium. Amount per instrument on application.Initial Public Offers and Due Diligence • • The 3-Day Post-Issue Monitoring Report. The 78. It is quantitative in nature. Offer Price. Date of filing with ROC. if any. Nature of the instrument.Day Post Issue Monitoring Report: • General Details about the Issue Opening and Closing Dates.compliance is specifically spelled out in this report. Any non. The Report contains details on: • • • • • • • Issue Opening and Closing dates. and the Issuer Company on the performance of the issue. It is needed in order to satisfy the regulatory bodies. on time. It is a report on the performance versus the promises made. . Just like the Prospectus of a company sets out the objectives and the purpose behind the issue in detail. It also draws attention to the targets that have been met and the proposed goals that have been achieved. Issue Size. It brings out the progress of the issue and helps locate shortfalls. the 78Day Post Issue Monitoring Report shows how far these objectives and purpose have been accomplished.Day Monitoring Report is thus not a mere formality. This report serves as an indicator to point out any discrepancies encountered against any initial proposals made. The following are some of the details that may be included in the 78. The 78-Day Post-Issue Monitoring Report The 3-Day Post-Issue Monitoring Report This report is to be submitted within 3 days of the closure of the issue. The 78-Day Post-Issue Monitoring Report The 78-Day Post Issue Monitoring Report focuses on the smoothness with which the concerned issue of the Initial Public Offer took place in the 78 days after the closure of the issue.
The project will address all the above activities involved in the management of IPOs to bring forth the significance of the dynamic role played by the Investment Banker in this sphere. Subscription Details. o Information related to reserved categories such as NRIs. • though mentioned in the Prospectus. Number of times issue subscribed (= No. and guiding and coordinating the other intermediaries associated with the issue. etc. an Initial Public Offer (IPO) is the first public offer of securities by a company since its inception. Names and amount of Firm Allottees who did not meet their commitments Allotment Details such as Number of successful Allottees. • • case of under subscription. Banks. Managing an IPO involves a number of mechanical and intellectual efforts that need to be applied in activities such as channeling the financial surplus of the society into productive investment avenues. Title of the project . Details on the amount of issue underwritten and details of underwriters. • unsuccessful Allottees. Number o Applications received and instruments applied for.Initial Public Offers and Due Diligence • • • • • Number of collecting banks and bank branches. etc. Of instruments applied for / no. Amount of subscription received. In this respect. in instruments under net public offer category) • Employees. Statement of problem The decision by a company to go public is a critical one as it results in the dilution of ownership stake and the diffusion of corporate control. number of Amount of Refund due and names of Refund Bankers. exercising Due Diligence to ensure the adequacy and appropriateness of the disclosures made in the Prospectus. The Investment Banker acts as an intermediary between the issuing company and the ultimate investors who purchase these securities. FIIs.
Research methodology The researcher conducted a descriptive research to arrive at the analysis and findings. • To analyze the effect of Initial Public Offers on the issuing company. Sampling plan The sampling technique employed was judgmental sampling because the researcher had the liberty of selecting the sector and the years to be considered for arriving at the conclusion.Initial Public Offers and Due Diligence “Initial Public Offers and Due Diligence: The Role of a Investment Banker” Objectives of study • To study and understand the concept of and procedure involved in Initial Public Offers (IPOs). • To understand the role of an Investment banker in managing Initial Public Offers. Moreover. Scope of study The scope of the project is confined to the companies mandated to the Investment Banking Division (IB) of ICICI Securities Ltd. A descriptive research is the suitable kind of research methodology which has been used for conducting this study because the study involves an in depth knowledge and a lot information about the subject matter. . it is confined to companies going in for IPOs. investors and the stock market. (I-SEC). • To study and understand the process of Due Diligence and its significance in Initial Public Offers.
It explains the importance and the critical role played by an investment banker .bseindia. Initial Public Offers and Due Diligence: The Role of a Investment Banker. The secondary data used in the research was collected from the following sources: www.Initial Public Offers and Due Diligence Data collection: Secondary data consists of information that already exists somewhere having been collected for some purpose. .e. Moreover the researcher has tried to justify the sources from where investment banker raises funds for the IPO.com www.com Limitations of the study • If any incorrect information is furnished by the clients. the same will be carried forward in this project work. Taking the case study of emami ltd the researcher has tried to explain the basis for allocation of shares by the investment banker for emami IPO. this study is confined to a few companies only.com www.companylawinfo. • Although Initial Public Offers are issued by many companies. Research process The study begins with the understanding of the topic under discussion.com www. i. These are companies that fall within the clientele of ICICI Securities Ltd (I-SEC).emamigroup.capitalmarkets.
The ECM group offers the following services: Capital Structuring Initial Public Offering and Issue Management . it has consistently provided professional guidance and expert services. ICICI Securities has also been a key player in the divestment programme for the Government of India (GOI) and has acted as a financial advisor to the GOI in respect of several transactions. Over the years. enabling it to structure and successfully place a wide array of Capital Market products that meet the requirements of the issuer. it has developed strong relationships with institutional investors and other market intermediaries.Initial Public Offers and Due Diligence ICICI Securities Ltd: Company Profile Background ICICI Securities Ltd has been one of the best investment banking companies whether acting as a Lead Arranger in the Equity Capital Markets (ECM) or providing execution facilities to its clients. investor and the market.
the first media issue in recent times (Television 18 Ltd. a Taj Group company. etc. These included the first IT industry IPO in recent times (Sonata Software Ltd.. The Equity Sales business arm focuses on institutional clients in the secondary market. high quality research and takes pride in its depth and width of coverage. it has been instrumental in introducing new instruments in the Indian Capital Markets such as the first convertible debenture. the first warrant issue. In addition. it targets the retail investor segment as well.). Earlier. The Equity Research wing of ICICI Securities undertakes research on leading Indian companies to advise institutional clients on investing in equity instruments. ICICI Securities was also the first and only Indian Investment Bank to solely lead manages a GDR offering . the largest Book Building Issue in India till date (HCL Technologies Ltd. The team has built a reputation for its unbiased. The Prime Primary Market Annual Report 2000-2001 rates ICICI Securities among the top three Investment Banks in India in the ECM business. The client list includes fund mangers from India.) and the first basic telecom services sector IPO (Hughes Tele. ICICI Securities is poised to emerge a frontrunning performer in equity sales.com India Limited).). ICICI Securities lead managed several issues in the past two years aggregating over Rs. With a well established sales and dealing team. For IPOs. . the first Market Price linked debenture conversion.Initial Public Offers and Due Diligence Private Placement of Equity Underwriting Share Buyback ICICI Securities over the years has emerged amongst the leaders in ECM and is credited with various innovations and firsts in the markets.Oriental Hotels Ltd. The ECM group draws seamlessly on the expertise provided by the Equity Research and Equity Sales teams on all the public offerings. 23 Billion. Far East and Europe.
ICICI Capital Services. too. Retail.600 shares resulting in 36. ICICI Securities have made significant inroads into the Middle East and European markets. The Issue received 1.31 times subscription. ICICI Webtrade and a large Sub-broker network across the country. Its commitment to quality and customer focus has meant a strong order book even in adverse market conditions.Initial Public Offers and Due Diligence Being a part of the ICICI Group. Up to 50% of the net Issue to the public shall be allocated on a discretionary basis to Qualified Institutional Buyers ("QIBs"). ICICI Securities is in a position to leverage on the group’s strengths residing in ICICI Bank. Further. Non Institutional and Qualified Institutional investor categories are as under: . Internationally.533.347 bids for 181. It has always been the endeavor of ICICI Securities to bring all the market constituents together in a mutually beneficial relationship Part –I Basis of allotment Emami ltd.78. The Issue is being made through the 100% Book Building Process wherein up to 10% of the issue is reserved for Employees of the Company. not less than 25% of the net Issue to the public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 25% of the net Issue to the public shall be available for allocation on a proportionate basis to Retail Bidders. subject to valid bids being received at or above the Issue Price. The details of the applications received in the Issue from Employees.
147. The category was oversubscribed 58. 2005 A. of Shares Bid Subscription 96. of Shares % of Total Cumulative Total Cumulative % 60 61 62 63 1. The total number of shares allotted in this category is 11. The total number of shares allotted in this category is 4.494 185.110 Retail Investors 177. of Category Applications Qualified Institutional Buyers 76 Non Institutional Investors 1.03 98.) No.777.000 65.Initial Public Offers and Due Diligence No.550 42.23.300 Equity Shares.594 100 99.86 The Basis of Allotment was finalized in consultation with The Stock Exchange.044 185. B.437.286.466.800 42. was finalized in consultation with BSE.62.859. 70/.86 16.per Equity Share was finalized in consultation with BSE. The category-wise details of the Basis of Allocation are as under: . who have bid at cut-off or at the Issue Price of Rs.72 58. The under subscribed shares of the employees reservation portion being 76.800. The allotment was full & firm for all valid bids. Mumbai (BSE) on March 21.508.95 0.813.018 Employees 143 Final Demand No.000 423. who have bid at cut-off or at the Issue Price of Rs. Allocation to Employees The Basis of Allocation to the Emami Limited.02 0. Allocation to Retail Investors The Basis of Allocation to Retail Investors.85 A sample of the final demand at different bid prices is as under: Bid Pirce (Rs.54 times. 70/.54 0.per Equity Share.000 18.400 0.494 185.900 31.000 318.05 99.200 Equity Shares have been apportioned for allocation in the Retail and the Non Institutional category in the ratio of 50:50.17 0.02 187.
of % to total Shares Application 100 200 300 400 500 600 700 47709 33142 17969 8430 13269 4860 51639 26.72.17 No. % to of total Shares applied 4770900 6628400 5390700 3372000 6634500 2916000 36147300 7.68 1.184028 0.92 0.62 Total % to No.08 0.75 29.72 1. Shares of Allocated Shares allocated 100 100 100 100 100 100 200 1:02 8:13 21:29 FIRM FIRM FIRM FIRM 3100 800 12600 1800 1200 800 3600 .15 4. of % to total Application 62 13 174 18 12 8 18 5.24 No.62 1. was finalized in consultation with BSE.08 0.434028 0.per Equity Share. Allocation to Non Institutional Investors The Basis of Allocation to the Non Institutional Investors. Of Ratio Total No.59 1. The category was oversubscribed 16.76 7. of Shares 800 900 1000 1100 1200 1300 2500 No. The total number of shares allotted in this category is 11.07 4.06 8. Of Ratio Shares Allocated 100 100 100 100 100 100 100 1:57 0.95 18.17 15.72 10.06 0.89 No.5 2.12 10. who have bid for at the Issue Price of Rs.900 Equity Shares.11 0.26 0. 70/.63.43 54. A sample of category-wise details of the Basis of Allocation is as under: No. of total Shares applied 49600 11700 174000 19800 14400 10400 45000 0.273611 0.24 10. of Shares allocated 83700 116900 95500 59600 117000 51400 638200 C.520139 Total No.19 5.360417 3:34 0.06 0. of Total No.Initial Public Offers and Due Diligence No.
18.9 0.36 0. of Shares FIs/Banks MFs 38. Though the companies have generally no obligation to do specifically what investment bankers suggest but because investment bankers have the expertise hence their suggestions generally prevail.06 0.27 0.09 0.81 0.18 0.12 4.000 Interpretation Allocation of the shares is done in consultation with the investment banker. Thus if we look at the allocation pattern of the shares it becomes clear that the investment banker/ company not only has to follow the guidelines of SEBI but also need to closely watch the market condition .50.84 200 300 600 700 800 900 1200 1900 3100 6200 9300 18600 30900 126100 FIRM FIRM FIRM FIRM FIRM FIRM FIRM FIRM FIRM FIRM FIRM FIRM FIRM FIRM 2000 2700 600 700 800 12600 49200 5700 6200 55800 37200 18600 30900 126100 D.000 4.78 3.09 40000 48600 10500 12100 13500 210000 820000 90000 100000 900000 600000 300000 500000 2038400 0.09 0. Allocation to QIBs Category No.06 0. This is basically because the secondary market needs to be heated for the company to get good returns.53 4.59 2.81 0.26 3.19 1.000 FIIs Insurance Companies VCs Others Total 22.36 0.09 0.Basically it’s the investment banker on whose suggestion the time of issue is decided by the company .Initial Public Offers and Due Diligence 4000 5400 10500 12100 13500 15000 20000 30000 50000 100000 150000 300000 500000 2038400 10 9 1 1 1 14 41 3 2 9 4 1 1 1 0.69 0. .26 0.07 1.000 17.66 10.09 1.09 0.000 2.21 0.48 0.92.
.Initial Public Offers and Due Diligence Part – II Valuation and pricing of IPO Orange In March 1986 the mobile telecommunications company. Market Relative Analysis (MRA). A number of approaches were used to value Orange which relied on: Discounted Cash Flow (DCF) analysis. was floated on the UK stock market for the first time. Two MRA methods were used: the multiple of EBITDA (Earnings Before Interest. Tax. The determination of the IPO price for the company was interesting given that Orange was a loss making company with few assets and little other than ‘blue sky’ forecasts with which to undertake a valuation.45bn and the shares achieved a 19. whereby future earnings are estimated for the business to be valued and are related to the market multiples for a peer group set of companies. The sale price was £2.9bn.5 per cent premium. whereby future free cash flows are discounted by the Weighted Average Cost of Capital (WACC) to arrive at an enterprise (sometimes known as business) value. the day after the float valuing the whole of Orange at £2. Depreciation and Amortisation) and the multiple of PER (Price Earnings Ratio). Orange.
8 2003 436.4 The free cash flows in Figure 1 reflected the enterprise situation. in keeping with normal practice in pricing IPOs.4 2002 448. £ million 1996 – 397. no more than the cost of .8 2004 484 2005 498. The rationale for use of the cost of capital is that beyond the period over which analysts are comfortable in forecasting. Decisions about the generation of the free cash flows for the ten year period chosen to analyze the business were vital but. prior to the deduction of interest servicing charges. However. two other crucial decisions had to be taken: What discount rate (Weighted Average Cost of Capital) to use to work out the present value of these future cash flows? How to calculate the terminal value for a business in which the cash flows are generated relatively far on and where there is potential growth in the market beyond the period over which analysts are comfortable with forecasting.Initial Public Offers and Due Diligence The ‘blue sky’ nature of the business made some form of DCF analysis necessary. these two questions are related to one another. for which MRA methods are absolutely essential in order to make their cash flow forecasts. one group of analysts generated the free cash flow forecasts as illustrated in Figure 1: Figure 1: Estimated free cash flows 1996 to 2005. The negative Free cash flows in the first two years and the slow build up to positive free cash flows were a reflection of the substantial capital expenditure requirements. The determination of the terminal value is very often calculated making use of the cost of capital which.0 1998 1999 32. In fact. is used to calculate the discount rate. For example. 1997 156. debt repayments and dividends. i. reliance on this method alone could not be supported because at the end of the day there is the need to refer the pricing to current market conditions. in turn.9 2000 315.9 176. in this case.2 2001 400.e.
the published betas are adjusted to reflect the potential level of debt relevant to Orange. the beta for Vodafone is used as a proxy for the beta of Orange.4 per cent was obtained. the exception to this is where it is estimated there will be further growth.5% 4.4% 33% 0. Quite simply.5 7.Initial Public Offers and Due Diligence capital (or normal profit) will be achievable.2 7.8-2.1 1. an adjustment is required via an unlevering and relevering process. Typically. Figure 2: Cost of Capital Determination Vodafone plc (comparable company) Marginal tax rate Debt Market capitalization Unlevered beta Orange plc Tax rate Target Debt Equity ratio Levered beta Risk free rate Risk premium Cost of equity 33% 0. a number of comparable peer group companies would be used in arriving at an estimate of the WACC for Orange. This.2 .6% 14. An illustration of how the Weighted Average Cost of Capital (WACC) might be estimated is shown in the Figure where it is assumed that Vodafone is a comparable company. As will be seen. with their betas being assumed to be relevant as indicators of market risk. when adjusted for the debt equity mix and an assumed post-tax cost of debt. an estimate for the Orange cost of equity of approximately 14. resulted in a WACC of approximately 12 per cent.3 1. Where there is a difference in capital structure. In effect. Once this adjustment had been applied to the betas and the results fed into a Capital Asset Pricing Model (CAPM) calculation.
4% As regards estimation of the terminal value. Is deducted the result is a market value of equity of approx. While this can undoubtedly help in forming a view about a range of values. the result is a present vale of free cash flow for the ten year period from 1995-2005 of approx. but we think there is scope for a more challenging approach.Initial Public Offers and Due Diligence WACC assuming pre tax cost of equity at 10% 12. as it was done in the case of orange. or sometimes. sadly the outcome may all too often be that the analyst averages the results. In the remainder of this article we will review this approach. To facilitate IPO valuation and pricing a number of approaches will be used. using a simple. Results in a residual value of approx. Interpretation If this WACC of 12. Applying a 4% perpetuity.2 bn. stock market β comparison . 1. many analysts used the growing cash flow in perpetuity formula.845 billion and an enterprise value of 2. We recognize that such averaging may represent a means of cross-checking. 2. a weighted average.6 billion.4% is applied to DCF model. 724 million. Estimating Systematic Risks for Company Projects on similar ventures.) Estimate β : (If not known. If the starting debt of 400 mn. This was argued as being because within the UK market growth forecasts for the mobile industry had been shown to be underestimated substantially.
• project: . 8. so we need to find the WACC for the • • • time. and in US. but if project is also financed with debt. the rate is 9. etc. the proportions of debt and equity. Estimate WACC using β Find E(rj): expected return on equity by: Finding rf: usually government bond rates Finding [ E(rm) .rf]: typically found in stock market “excess” gain over Apply these figures to the equation for the SML including the beta for the E (rj) = rf + [E(rm) -rf] β j project (rv*) At step 4. and the given beta of the debt to solve for beat of the equity. This is the beta that would exist if the company had no debt outstanding. (in UK. we have the required return for equity. Adjust for revenue and operational gearing: Company Revenue Volatility Revenue adjusted β = β u Project Revenue Volatility Project β u = Revenue adjusted β ( 1 + Project fixed cost %) ( 1 + Company fixed cost %) Now the beta of the equity of the project can be found by the formula given above: β u =β e E/V + β d D/V The idea here is to plug in the ungeared beta number for the project.8% historically). financial (debt content).Initial Public Offers and Due Diligence Finding Beta: Establish “benchmark β “: Gearing--adjusting due to operations (fixed cost). Find ungeared beta: β u =β e E/V + β d D/V The ungeared beta is found by the above formula.1.
The rising rupee.) Find E(rd) by plugging in the beta for the debt in the SML equation from step four. the Interim Budget. just use debt beta instead Apply the effect of interest tax shields to debt’s required return to find the true cost of debt (rd*). (Equation is same. interest rate differential and the rising secondary market were added propellers to the existing momentum. and thru the project. . a buoyant secondary market means a pricey Initial Public Offer. The inability to find a mechanism that correctly discovers the price has resulted in a viscous circle: Issuing Companies don’t step out unless the secondary market is heated. Dazzled by the returns provided by most entrants in the Primary Market in 2003.Initial Public Offers and Due Diligence of equity beta. There was the Mini Budget. more Reforms and confusion over the government’s intention to offer for sale its stake in the divested and not yet divested PSUs. a number of events took place that lead to scams and scandals. proportions of debt and equity for the project. domestic investors have used the heated markets to gain profits and get ready for the ‘IPO Wave’ to make up for all their earlier losses.(rd*). the Exim Policy. Now we know (rv*) . so we can now calculate the WACC for Certainty Equivalents Findings During the first half of year 2004. Again.
The number of successful issues handled by the Investment Banker also adds to his reputation . The result is that most of the subscription is at the lower end of the price band. thereby taking the entire process far from its purpose of reaching a crescendo at a significantly higher price. regulations and formalities. Legal compliance has to be maintained.price issues. Moreover.Initial Public Offers and Due Diligence The book. The relevant and updated information on the Company has to be captured precisely in the Prospectus. The decision by the Investors on whether to invest in a Company is influenced significantly by the information contained in the Prospectus. the Company’s potential should not be understated in or lost in the Prospectus because of the weight of such rules. The visible manifestations of this are gimmicks such as fixing the floor price in the price band or offering a discount to the issue price to the retail investors.building process has added to the uncertainty. Institutional investors can influence the floor price or price band even before the issue opens by depressing prices in the run-up to the building of the book. Lower the floor price or the band range. in this sense become symbolic of the Issuer Company knowing its worth and presenting a concrete picture to the investors about the purpose of issuing its IPO. higher are the chances of over-subscription or premium on listing. each calling for a great deal of verification. The fixed. Conclusion The issue of an IPO by a Company involves a number of stages. The Investment Banker’s job is thus to handle the entire Issue of the IPO of a Company by guiding it and coordinating the activities of the various intermediaries involved. The Regulatory Bodies are also involved and there are set procedures that must be followed.
It is for this reason that he must be very careful and lay stress on the process of Due Diligence. You may even be buying seeds from an existing fruit-bearing tree. you are buying cheap today something that maybe of value tomorrow. By buying a sapling whose value may grow to Rs 500. . This practice amounts to turning a proprietorship into a corporate. some companies form a Board of Directors that does not consist of professionally qualified and carefully chosen executives. But you need to have some knowledge of apple trees. But an apple sapling may cost Rs 5. for any minor non-compliance could prove to be fatal. A half-grown apple tree that is yet to bear fruit may cost Rs 100. A Company must enter its equity shares into the market by providing the investors with a concrete picture of itself. now own fully grown fruit-bearing trees Suggestions The following are some suggestions to the Issuing Company. A fully grown apple tree may cost Rs 500. Investors who saw the potential of Infosys or Satyam and bought little saplings. Why buy an IPO and not through the secondary market? With an IPO you get a shot at buying a tree when it is just a sapling. its business and its plans. the Company is usually considered to be a good choice to invest in. if all compliance has been adhered to truly. It is only if the investors are convinced with the good potential of the Company that they will invest in its IPO.Initial Public Offers and Due Diligence in the market. the purpose being to keep the company within the family’s internal control. You have a chance to part-own a business before it has fully grown or in a grown company’s expansion plans. but rather of family members. For egg. IPOs are the same. Auditors and other executives should be formed keeping the regulations for Corporate Governance in mind. The Board of Directors. and if the Investment Banker has performed his Due Diligence well. to Sebi and with special emphasis. horticulture and apple markets before you can identify a sapling with potential. to the investors: To The Issuer Company • The issuer must stress on Corporate Governance. Apart from this. The SEBI Regulations and the Companies Act should be understood well.
Issuer Company and investors to plan in advance. and investors’ decision cannot be made on a true basis. as allotment will depend on the number of institutional investors applying and not on the number of shares applied for. and the costs associated should be truly quoted. . • To combat the influence that institutional buyers can have on the floor price and the price band. leading to hesitant and low subscriptions. The investors need to know what exactly the funds raised from the IPO will be invested in. There should be clearly spelled out objectives for the project. • The issuer company not indulges in ‘patch-work’.. This leads to an inaccurate prospectus. The time limits need to be maintained since the timing of the issue of the IPO depends to a great extent upon the clearances and approvals received from SEBI. that investors would opt for the IPO with confidence in its potential. Any scope of doubt or ambiguity in the project must be avoided. information in the Prospectus is also intentionally distorted.Initial Public Offers and Due Diligence • The Issuer Company must provide fixed and concrete project implementation details. i. the Board can: • Insist on a minimum number of institutional investors.e. This has a ripple effect. their number should proportionately increase with the size of the issue. it should not try to raise more than required from the market. The project plan should be clearly defined. To The Securities and Exchange Board of India: • The Board must adhere to the time limits fixed for replies and observations in order to enable the Investment Banker. If reasons given are exaggerated for raising more than what is required for the project. and it is only if the project details are very clear and reasonable. The investor thus is unable to gauge the potential of the IPO issue and the company performance. This should check the unbridled oversubscription from this section.
HSBC Securities and Kotak Mahindra among others. • What is the promoter holding in the company? Is there any participation from financial institutions or a venture capital firm? Issues where post-issue promoters’ holding is more than 80% may indicate a lack of liquidity in the stock since there are fewer shareholders trading fewer shares. One must also look for the shareholding pattern. but does not assure success. • SEBI should send the issuer back to rework the pricing if the issue is subscribed more than two times. In case of offer for sale. One must also find out if this is an offer for sale or a genuine Initial Public Offering. This would indicate the risk profile of the company and the expectation of the .Initial Public Offers and Due Diligence • If the issuer is unable to meet the quota of institutional investors. one can look for category-one lead managers for judging the quality of the issue that includes DSP Merrill Lynch. One must be careful of companies that have issued shares on a preferential basis to promoters in high proportion. investors are suggested to run a check on the following factors: • Who are the Lead Managers to the issue? Do Lead Managers act as an indicator of the quality of the issue? The Lead Managers act as a catalyst as they attempt to bring in some credibility to the offer and their accountability is also very high. Another suggestion is to look for companies in which venture capital firms or financial institutions have participation or substantial interest. There have been poor issues from good Investment bankers in the past. One must remember that the lead managers’ credibility could act only as an indicator to the proposed issue. For the purpose of security. the issuing company may not benefit totally. so as to increase their stake in the company. This will ensure the entry of only quality issues. the issue should stand devolved. This will eliminate the extravagant premium at which most of the IPOs have been getting listed and subsequently deflated To Investors: Before investing in an IPO.
What needs to be known is what the company is exporting and export income as a percentage of sales. • Which sector does the company operate? What is the growth prospect of the company vis-à-vis the sector? The growth of the company in proportion to the growth of the market in which it operates has to be seen. This would .Initial Public Offers and Due Diligence institution from the company. One should be careful of companies whose cost of project and means of finance have not been appraised by banks or financial institutions. If the company is utilizing a portion of issue proceeds towards retiring high-cost debts. For example. Promoter experience is very crucial. software sector is vulnerable to high employee turnover. The proportion of money that is being invested in new projects that it is venturing into also needs to be checked. it would benefit the company in terms of lower interest outflow and therefore higher profitability.Each sector has its own internal and external factors that influence the operation of the company. Export projection of the sector need not necessarily reflect the export potential of the company. • Where is the company investing the money? Is it going to give good returns? If the major portion of fund mobilized is being invested in land. For example. figures of global software market or Indian software market do not indicate the exact future growth potential of the company since it is inclusive of all products and services. One must also look out for its market share or the projected market share vis-à-vis domestic competition. • Do the promoters have enough experience? Do the promoters have previous experience in transforming organizations from the grass root level in the same industry to a successful business? What is the experience they have in the sector the company is operating in or any other sector. buildings (the socalled green field issues) one must be careful. This would give some judgment on the estimated profitability of the company. The profitability of any subsidiary or affiliate company in which promoters have a stake or substantial interest is also important.
Check the competitive scenario of the industry. Are the margins projected comparable with other companies in the same Are there any unusual costs or unusual rise in other income sector? (recurring/non-recurring)? Some companies show an unusual rise in their sales and net profits by 5-10 times. This needs to be justified by comparing the sales growth figure. it does not mean that the company would grow by 20%. Addressing competition at a macro level may reflect the exact picture. Annexure: 1 . • Will the money invested yield maximum returns? Are the profit projections achievable? The following are the crucial questions that should be asked: What is the sales growth projected by the company vis-à-vis others in the sector and the industry growth rate? If the market is growing at 20%. Assume that the market is growing at 12% per annum.5 x the industry growth. X Company manufactures paints. nature of litigation and the promoter’s extent of liability. If the company is claiming that it is competing with e-enabled service providers. if any. let’s say 6%. If sales of the company grew by. it means that the company is growing at the rate of 0.Initial Public Offers and Due Diligence enable one to ascertain the management’s efficiency in terms of managing organizations. Let’s take a hypothetical example. check out what type of eenabling services they provide. One must also check for litigation against the promoters. This would help in ascertaining growth potential of the company.
whether oral or written. He shall wherever necessary. which has come to his knowledge. and . exercise due diligence. which is likely to be harmful to the interests of other Investment bankers or is likely to place such other Investment bankers in a disadvantageous position in relation to the Investment banker. 5. disclose to the clients. 1992 Code of Conduct for Investment Bankers (Regulation 13) 1. ensure proper care and exercise independent professional judgment. A Investment banker shall not a. An Investment banker shall not make any statement or become privy to any act. to the client either about the qualification or the capability to render certain services or his achievements in regard to services rendered to other clients. efficient and needs and the environments and his own professional skill. An Investment banker shall render at all times high standards of service. and cost effective manner. while providing unbiased services. An Investment banker shall not make any exaggerated statement. A Investment banker shall always Endeavour to a. render the best possible advice to the clients having regard to the clients' Ensure that all professional dealings are affected in a prompt. possible sources of conflict of duties and interests. An Investment banker in the conduct of his business shall observe high standards of integrity and fairness in all his dealings with his clients and other Investment bankers. b. 6. divulge to other clients. 4. 2. press or any other party any confidential information about his client. while competing for or executing any assignment. 3. 7.Initial Public Offers and Due Diligence Securities and Exchange Board of India (Investment Bankers) Regulations. practice or unfair competition.
d. 10. application money without delay. price rigging or manipulation. Passing of price sensitive information to brokers. memorandum and related literature are made to the adequate steps are taken for fair allotment of securities and refund of Complaints from investors are adequately dealt with.Initial Public Offers and Due Diligence b. the investors are provided with true and adequate information without making any misguiding or exaggerated claims and are made aware of attendant risks before any investment decision is taken by them. b. c. An Investment banker shall abide by the provisions of the Act. A Investment banker shall Endeavour to ensure that a. rules and regulations and which may be applicable and relevant to the activities carried on by the Investment banker. members of the stock exchanges and other players in the capital market or take any other action which is unethical or unfair to the investors. Deal in securities of any client company without making disclosure to the Board as required under the regulations and also to the Board of Directors of the client company. b. investors. The Investment bankers shall not generally and particularly in respect of issue of any securities be party to a. and 9. c. copies of prospectus. creation of false market. . 8.
4. Name of the issuer company Issue opening date Earliest closing date Actual closing date Date of filing prospectus with Stock Exchange Issue details (as per the prospectus) 6.4 Nature of instrument Equity Shares of Face Value Rs. 5.3 6.Initial Public Offers and Due Diligence Annexure:II SAMPLE OF 3 DAY REPORT SENT TO SEBI PUBLIC ISSUE OF EQUITY SHARES BY SUBSCRIPTION STATUS: SUBSCRIBED 3 Day Monitoring Report (Responsibility: Post Issue Lead Manager) 1.1 6.2 6. 6. 3. 2.10 Offer price per instrument for different categories Amount per instrument on application for different categories Issue Size (a) Promoters’ contribution (a)(i) Date of submission of Not Applicable auditors’ certificate to SEBI for receipt of promoters’ contribution : : : : : (b) Amount through offer document (including reserved categories and net public offer) (b) (i) Reserved Category – No of shares reserved Firm basis Competitive basis Mutual funds FIs/ Banks FIIs & NRI .
Non-QIBs shares. Please tick mark whether 90% minimum subscription of the amount through offer document is collected: (i) Yes(ii) No Provisional Subscription % Subscribed For (Registrar to the Issue) For (Issuer) Authorized Signatory Authorized Signatory 78 Day Monitoring Report .e. (a) Provisional subscription details of the net public offer (including unsubscribed portion of reserved categories) I Ii Total amount to be collected on As per the price Bids. Lacs (being provisional subscription to the net public offer) Iii 7. application Amount collected on application Retailshares.Initial Public Offers and Due Diligence Employees Others (Please specify) (ii) Net public offer of ****Equity Shares of Rs*/. % subscribed i.issued at a price Band of Rs * each. 7. QIBs shares. % of (ii) to (i) (b) Amount subscribed by the reserved categories on competitive basis Reserved on competitive basis FIIs & NRI Employees 8. At a price of Rs aggregating Rs.
Issue opening date : 3. Allotment Details No. : 2) No.Initial Public Offers and Due Diligence PUBLIC ISSUE OF EMAMI LTD SUBSCRIPTION STATUS: SUBSCRIBED Final Post Issue 78 Day Monitoring Report (Responsibility: Post Issue Lead Manager . Subscription Details a) Public Offer (Net) (Including unsubscribed portion of reserved category added back to net public offer) 1) No. Bank-wise names of branches which did not submit final consolidated certificates within 21 days from closure of issue and mention the dates when they actually submitted : 7. of applications Employees The firm allottees who did not meet their commitments though mentioned in the prospectus (Please give their names and amount and whether the promoters have subscribed to that amount before opening of the issue).ICICI Securities Limited) 1. of Bank Branches) 6. Actual closing date : 4. 3-Day Report Due on: Submitted on : 5. of instruments applied for : 3) Amount of subscription received : 4) No. Name of the Company : 2. of instruments applied for Amount subscribed (Rs. of valid applications recd. No. of times issue subscribed : (b) Information relating to reserved categories Reservations No. Lacs) . 9. of Collecting Banks : (Also specify no. Actual Date of finalization of Basis of Allotment (enclose copy) : 10.
for which period : 12. if any : . Reasons for delay in listing for trading. If there is a reservation for NRIs. Date on which application was filed with each stock exchange for listing of instruments : 20. Refund Banker(s) (Name and Address): 15.2 No. Date when listing and trading permission given by each stock exchange (Enclose copies of permission letters of stock exchanges) : 21.1 No.Initial Public Offers and Due Diligence 10. of successful allottees per 1 lac shares : 10. Date of completion of dispatch of refund orders 17 Name of Designated Stock Exchange : 18 Names of other stock exchanges where listing is sought : 19. Date of transfer of refund amount to Refund Banker. date(s) of completion of dispatch of (a) Refund Orders : (b) Certificate/Allotment Letters : (c) Reasons for delay in dispatch. if any : (f) Whether interest paid for delayed period. of unsuccessful allottees : 11. Actual Date(s) of completion of dispatch of (a) Refund Orders : (b) Cancelled stock invests : (c) Certificates/Allotment Letters : Demat credit of shares (d) Certificate/allotment letter against application by stock Invest : (e) Reasons for delay in dispatch. if so. if any : (d) Whether interest paid for delayed period : (e) Date of submission of application to the RBI for approval for dispatch of share certificates / demat credit: (f) Date of approval received from RBI : 13. if any : 16. Amount of refund due : 14.
2005 Authorized Signatory Reference List .Initial Public Offers and Due Diligence CERTIFIED that the information given above and also in the enclosures are true to the best of our knowledge and no refund orders / allotment letters / certificates are Pending for dispatch in respect of the issue. (Registrar to the Offer) MAPIN – (Issuer) Authorized Signatory For (Post-issue Lead Manager) MAPIN Authorized Signatory Place: Mumbai Date: March 28.
Israni. K. 2004. 1956. and Amendments Guidelines issued by Ministry of Finance Stock Exchange by-laws.com www. The Economic Times The Hindu Business World I-Sec Annual Books WEBSITES www. pg. Dr. Capital Market. Application Forms. 2004. Capital Market.R. • • JOURNALS ‘The only attraction is the offer price’. May 24-June 6. SEBI Guidelines The Companies Act. Manual of SEBI Guidelines on Capital Issues. 1992. Bharat Publishing House. 18-19. 20. March 1-14. pg. ICFAI Press.. ‘The great biotech story’.Initial Public Offers and Due Diligence • I-SEC. pg. pg. 2004.com . 76. Capital Market. 2004.com www. Capital Market. Compendium on SEBI Capital Issues and Listing. S. 4th ed. 74. Bipin Acharya. Sethuraman. Euro Issue. Nabhi Publications. 1996. Bharat Law House. Offer Documents.emamigroup. Chandtratre.com www. Verma. ‘Set to be a Pipeline Leader’. 5th ed.. pg..C. May 10-23. 2004.bseindia. K. Manual of Investment Banking. Dr.financialexpress.17-18. ‘Market Snapshot’.capitalmarkets. 76. Dr. IB All files and documents furnished by I-SEC’s client companies. Memorandum of Understanding. 1996. June 7-20.companylawinfo. New Delhi. 4th ed.com www. ‘Market Snapshot’. March 1-14. Risk Evaluation Committee recommendations.R. March 1-14. New Delhi. Capital Market. Stock Exchange Listing Agreement • BOOKS IPOs: The Role of an Investment Banker. 2004. pg. J. and other such documents being prepared by I-SEC for its client companies. Capital Market. Investment Banking and Mutual Funds. ‘Market Snapshot’.
com .Initial Public Offers and Due Diligence www.hindubusinessline.
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