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A

Presentation
on
“Marketing Of Primary Issue”

Presented By:
Ashwin Chaudhary (Roll No 5)
Mohsinkhan Belim (Roll No 2)
Primary market
 The primary market is that part of the capital markets
that deals with the issuance of new securities.
Companies, governments or public sector institutions
can obtain funding through the sale of a new stock or
bond issue. This is typically done through a syndicate of
securities dealers. The process of selling new issues to
investors is called underwriting. In the case of a new
stock issue, this sale is an initial public offering (IPO).
Dealers earn a commission that is built into the price of
the security offering, though it can be found in the
prospectus.
Methods of issuing securities in the
primary market are:
 Initial public offering;
 Rights issue (for existing companies);
 Preferential issue.
Role of the „Primary Market‟

The primary market provides the channel for sale of


new securities. Primary market provides opportunity to
issuers of securities; Government as well as corporates,
to raise resources to meet their requirements of
investment and/or discharge some obligation. They
may issue the securities at face value, or at a
discount/premium and
these securities may take a variety of forms such as
equity, debt etc. They may issue the securities in
domestic market and/or international market.
SEBI and what is its role
 The Securities and Exchange Board of India (SEBI) is the
regulatory authority in India established under Section 3 of SEBI
Act, 1992. SEBI Act, 1992 provides for establishment of
Securities and Exchange Board of India(SEBI) with statutory
powers for
(a) protecting the interests of investors in securities
(b) promoting the development of the securities market and
(c)regulating the securities market. Its regulatory jurisdiction
extends over corporates in the issuance of capital and transfer of
securities, in addition to all intermediaries and persons associated
with securities market. SEBI has been obligated to perform the
aforesaid functions by such measures as it thinks fit. In
particular, it has powers for:
Cont..
 Registering and regulating the working of stock brokers
 , sub–brokers etc.
 Promoting and regulating self-regulatory organizations
 Prohibiting fraudulent and unfair trade practices
 Calling for information from, undertaking inspection,
conducting inquiries and audits of the stock exchanges,
intermediaries, self – regulatory organizations, mutual
funds and other persons associated with the securities
market.
Issue of Shares
 Why do companies need to issue shares to
the public?
 What are the different kinds of issues?
 What is meant by Issue price?
 What is meant by Market Capitalisation?
The market value
What is an Initial Public Offer-IPO
 An Initial Public Offer (IPO) is the selling of securities
to the public in the primary market. It is when an
unlisted company makes either a fresh issue of
securities or an offer for sale of its existing securities or
both for the first time to the public. This paves way for
listing and trading of the issuer’s securities. The sale of
securities can be either through book building or
through normal public issue.
Marketing need for primary issue.
IPO Success: It's the marketing

 For Fully Subscription


 Awareness about new issue
 To attract public for investment
 To raise fund via more application
 To raise the market price via good imagination
Marketing of Primary Issue

 IPO management seems to be fast catching on, with


the “positioning” and “marketing” of an issue
becoming as crucial to its success as the fundamentals
of a company.
 In many ways, marketing an IPO is akin to marketing a
movie or an FMCG product, such as a cola or a pizza.
These days, IPOs need a touch of brand marketing and
management involving well-placed positioning and
correct pricing.
 That’s one part of the story. The other is
communicating the facts to prospective investors.
Cont..
 And here come the PR agencies, which have now assumed the
mantle of “communications experts”. Communications experts
today have to master the art of advising clients on Sebi guidelines
and compliances, PR activities, road shows and events, database
management and so on.
 Seamless interaction with distribution channels is not limited to
white goods or telecom companies. IPO industry also has its
own channel partners - the broking community and their sub-
brokers and agents at almost door-to-door level.
 Opinion makers aren’t limited to politics or Bollywood and the
automobile industry. Numerous brokerage agencies are
approached to analyse an upcoming IPO. “Third party
testimonials play a major role as analysts with sectoral knowledge
step in,” says the head of a large brokerage house.
Cont..
 Money management has acquired many
dimensions and an IPO is no different. Players
involved in IPO management await with bated
breath just as Bollywood stars, directors and
producers on the day of the release. Action over.
Cut.
Marketing the IPO
 Once it is filed the registration statement is transformed into the
preliminary prospectus or “Red Herring”
 The preliminary prospectus is used to market the issue
 The SEC has 20 days to declare the issue effective
 At that point the red herring becomes a prospectus
 The company and the underwriter promote the IPO through the “road
show”
 Road shows provide important monitoring for the underwriter on
investor demand
 During the road shows the underwriter receives orders from individual
and institutional investors - book building
 Retail investors typically submit a “market order” in which only the
quantity desired is stated
 Institutions typically submit limit orders where the quantity demanded is
subject to a maximum price
 Retail orders are received earlier than institutional orders since institutions
prefer to wait to a later stage of the process before submitting their orders
 Institutions submit an order with a commitment to purchase more shares
in the open market if their order is fulfilled
Contd..
 Roadshow Preparation
 Analysts may not participate in the preparation of, contribute to, comment
on, or review the roadshow presentation
 Bankers may not solicit input from Analysts on the roadshow presentation
 Marketing and Roadshow
 During marketing process, no event can be attended by Bankers and
Analysts together
 Analysts may not introduce management to buyside accounts during
roadshow
 Analysts may not provide input into the roadshow schedule or identify
investors to target
 Analysts may not attend roadshow meetings
 Analyst estimates and other perspectives/opinions may not be discussed or
distributed in any manner, at any time by Bankers or Management during
the roadshow
Contd..
 Analysts‟ communications with Investors
 Analysts may NOT make outgoing phone calls or other
communications to Investors to solicit interest in the
offering
 Analysts may respond to incoming calls from Investors
and discuss:
 Business fundamentals of the company
 Information contained in the prospectus
 Analyst‟s previously published research reports and financial
model
 Analysts may not discuss or provide an opinion with
respect to:
 Structuring or pricing of the transaction
 Any information not contained in the prospectus
Contd..
 Bankers and ECM personnel may not direct and
Analyst to initiate or take calls from investors
 Analysts may not communicate investor feedback
to Bankers or ECM personnel
 Analysts may not participate in the pricing call
 News Paper Advertisement
 During marketing process, no event can be attended by
Bankers and Analysts together
 Hear company or underwriter gives total information
about IPO in various news papers.
 Gives ads about issue in every news papers, so that
investor can know about IPO.
Contd..
 TV commercial
 During marketing process, no event can be attended by
Bankers and Analysts together
 Hear company or underwriter gives TV commercial ads
about IPO and company and its important facts of
business.
 Gives ads about issue in TV commercial, so that
investor can know about IPO.
 Online IPO Marketing
 Net worth: marketing your IPO online gives you
access to a whole new world of investors