Elements of Investor Presentation

PGCSM Trimester-II:Session 07-08

Investor Presentation
 Session V - Elements of Investors Presentation / Marketing
 History
 Management
 Industry
 Business
 Strength
 Strategy
 Key Performance Indicators
Deciding the Issue Structure

• Issue Composition:
 Deciding the issue composition - Primary and/or Offer for Sale
 IPO dilution to be achieved through either by:
 Fixing Issue Size in Amount (Variable Dilution), OR
 Fixing Number of shares to be issued (Fixed Dilution)
 Investor Bucket Sizes
 Allocation in the net offer to public category: 50% or 75% to QIBs as the case maybe
 60% of the QIB portion (i.e. 30% OR 45% of issue size) can be allocated to anchor investors.
 Option to include reservation for anchor investor on a discretionary basis

Anchor Investor Portion No of investors Minimum allotment per

investor
Up to Rs. 10 cr max. up to 2 Not specified

Upto 250 crore Min 2 and max upto 15 Rs 5 crore

More than Rs 250 Crore

For the first 250 crore Min 5 and max upto 15 Rs 5 crore
Every incremental Rs 250 crore Max upto 10
 Mutual Fund Reservations

• 5% of the QIP portion

• 1/3rd of the anchor portion
• Overall 11% or 16.5% of the total issue size (in case of anchor
investor)
• Overall 2.5% or 3.8% of the total issue size(in case of no anchor
investor)
Discount and Reservations
 A discount of maximum 10% can be offered to Retail Investors and Eligible Employees
 Reservation options are available:
 shareholders (other than promoters and promoter group) of listed subsidiaries or promoter companies, (max 10% of Issue
Size)
 permanent employees of the issuer or promoters or subsidiary company, other than promoter and promoter
• group, director holding more than 10% (max 5% of post issue capital) (Max Application Rs. 5 lacs)
• Reservation buckets can be added subject to exclusion from the minimum dilution of 10%
• Employees can bid in both Employee category and retail category
• Single application in the reserved category cannot exceed reservation portion
 Session VI – Roadshows
 Role of Research Analyst
 Institutional Sales
 Marketing
 Roadshows
Institutional Analyst:Role of Research
Analyst
◼ Study and analysis of financial information and market trends for a specific Company or group of
companies  within a specific sector,  
◼ Reviewing financial information and industry dynamics to make a recommendation for investors about
whether  to buy, sell or continue holding certain stock(s). 
◼ Analyzing public company financial data, news and other information to identify opportunities and risks
related  to companies or industries.  
◼ Writing research reports for initiations of coverage, analysis of data, earnings results, and industry news. 
◼ Conducting industry diligence and primary research through surveys, expert conference calls, and
various  channel checks to evaluate industry trends
Contd.
• ◼ Summaries about the sector they’re covering.  
• ◼ Communicate complex ideas in a concise, accurate, and detailed manner. 
• ◼ Strong understanding of the competitive landscape and macro considerations that affect the
sector is  important when making accurate predictions and recommendations. 
• ◼ Source, normalize and analyze market data that surrounds a company or sector
Preferential Issue
• Eligibility Conditions for Issuer and Allottee 

• ◼ Issuer 
• special Resolution has been passed by the Shareholders 
• the issuer is in compliance with the conditions for continuous listing  
• the issuer has obtained the Permanent Account Number of the proposed allottees before making in-
principle application with stock  exchanges 
• allotment shall be (a) fully paid-up & (b) to be in dematerialized mode only 
• None of its promoters or directors are fugitive economic offender 
• There should be any outstanding dues to SEBI, stock exchanges and depositories.
 Allottee 

• ◼ all the equity shares, if any, held by the proposed allottee in the issuer are in dematerialized form prior to
making in-principle application with stock exchanges; 
• ultimate beneficial owner to be disclosed in notice to shareholders  
• subscription money to come from allottee’s own account even in case of conversion of loan (i.e. loan is
received from allottee’s bank  account) 
• allottee (except for MFs, SCBs ) should not have sold or transferred any equity shares of the issuer during
the 90 trading  days preceding the relevant date [incase of promoter, no sale individually as well as by any
member of the Promoter Group, except  pursuant to (a) an inter-se exempt under SEBI Takeover
Regulations & (b) on account of invocation of pledge by SCB//systemically  important NBFC/MFs/
• In case Promoter /Promoter group has failed to exercise warrants allotted earlier then no preferential
allotment for one year from 
• • the date of expiry of the tenure of the warrants due to non-exercise of the option to convert 
• • the date of cancellation of the warrants, as the case may be
Regulations for Preferential Issue shall not apply in
these cases 

• ◼ Conversion of a loan or an option attached to convertible debt instruments, if such option of conversion have been approved  by the
shareholders before issuance of debt instruments or raising such loan; 
• Scheme approved by a High Court or approved by a tribunal or the Central Government 
• Pricing provisions shall apply to the issuance of shares under schemes in case of allotment of shares only to a select group  of shareholders or
shareholders of unlisted companies pursuant to such schemes 
• QIP in accordance with SEBI ICDR Regulations 
• Rehabilitation scheme approved by the BIFR under the SICA or the resolution plan approved under IBC, whichever is  applicable. The
lock-in provisions, shall however, be applicable 
• In case of preferential issuance to any financial institution pursuant to Recovery of Debts due to Banks and Financial  Institutions Act,
1993 (51 of 1993), pricing and lock-in shall not apply 
• Preferential issue to lenders (i.e. scheduled commercial banks (excluding Regional Rural Banks) and All India Financial   Institutions
pursuant to conversion of their debt, as part of a debt restructuring implemented in accordance with the  guidelines specified by the RBI,
subject to the following 
• Guidelines for determining the conversion price have been specified by RBI in accordance with which the conversion price   shall be
determined and which shall be in compliance with the applicable provisions of the Companies Act, 2013
• Conversion price shall be certified by 2 independent valuers 
• Lock-in for a period of one year from the date of their allotment. Lenders can for the purpose of transferring the control,  transfer the
specified securities before completion of the lock-in period, subject to continuation of the lock-in for the  remaining period, with the
transferee; 
• Lock-in of equity shares allotted pursuant to conversion of convertible securities issued on preferential basis shall be  reduced to the extent the
convertible securities have already been locked-in;
Pros Cons
✓Discretionary allocation enabling the Floor Price is driven by SEBI formula. SEBI
Company to  bring in quality long only formula gives weightage
investors  to a) 90 trading days VWAP pricing or b) 10
✓The shares issued are not subject trading days VWAP
to lock-in,  however should be Lock-in: Shares issued in the preferential
traded only on the stock  market  issue are subject to lock-in and existing
shareholding of the allottees is also subject
✓Relative to Rights issue and preferential lock-in (18 months for Promoters and 6
issue helps  in broadening of investor months for other shareholders).
base resulting in better  price discovery  Not an equitable manner of participation
✓Price risk is least as compared to Rights since public are not
Issue,  Preferential Issue and FPO offered a chance to participate
Investors are to be identified upfront
Qualified Institutional Placement-Regulatory
Framework
Pros Cons
Eligible Securities Equity
NCD & Warrants
Convertible securities other than warrants

Regulatory Approvals No regulatory approvals from SEBI and Registrars of

Companies
In-Principle approval and listing and trading approval
from stock exchanges are required.
Shareholders’ resolution in terms of Section 62(1)(c) of
Companies Act 2013, with specific reference to Chapter
VI of the SEBI ICDR Regulations, disclosing option to
provide discount on floor price and relevant date

Eligibility Equity shares should have been listed on a recognized

stock exchange for at least 1 year prior to date of
notice to shareholders
Allotment to be completed within 365 days from the date
of passing of the resolution
Subsequent QIP to be made after 2 weeks from the date
of the previous QIP
None of the Directors or Promoters should be fugitive
economic offender
Qualified Institutional Placement-Regulatory
Framework
Pros Cons
Pricing Average of the weekly high and low of the closing prices
during the two weeks preceding the relevant date (Floor
Price). Price to be adjusted for bonus / split / rights etc.
May offer a discount upto 5% to the above price, if approved
by the shareholders
Stock prices of the SE with the highest trading volume of the
Issuer’s shares during the two weeks immediately preceding
the relevant date to be considered

Relevant Date For Equity issuances – The date of board / committee

meeting in which it is decided to Open the Issue
For convertible securities – Either the date of board /
committee meeting in which it is decided to Open the Issue
or the date on which the holders become entitled to apply for
equity shares

Lock-in for Investor On-market purchase/sale is permitted and no lock-in

requirements.
Off-market transactions are not permitted for a period of 1
year from date of allotment
Investor /Allotment Considerations

• Allotment only to Qualified Institutional Buyers as defined in the SEBI ICDR rules.
• Promoter / Promoter Group / any person related to promoter of the Issuer cannot participate in the QIP
even if categorised as a QIB.
• Allotment
• Minimum 10% to be allotted to Mutual Funds
• Promoter QIBs / QIBs already holding rights under an existing ShareholdingAgreement / veto rights /
right to appoint nominee director to be excluded, except in the capacity of a lender
• No single allottee to be allotted more than 50% of the issue size
 QIBs belonging to the same group or those under same control deemed
to be a single allottee
Qualified Institutional Buyer
 Mutual funds
 Venture capital fund
 Alternative investment fund
 Foreign venture capital investor registered with SEBI
 FPI other than individuals, corporate bodies and family offices
 Public financial institution
 Scheduled commercial bank
 Multilateral and bilateral development financial institution
 State industrial development corporation
 Provident fund with minimum corpus of INR 25 crores
 Pension fund with minimum corpus of INR 25 crores
 National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the Government of India
 Insurance companies registered with the IRDA or Department of Posts, India
 Insurance funds set up and managed by army, navy or air force
 Systemically important non-banking financial companies (i.e. NBFCs whose asset size is 500 crores or more as per audited balance
sheet
Other considerations
•  Placement Document 
• ⮲ Private, provided to select investors through numbered copies 
• ⮲ Should contain all material information including as specified in the SEBI ICDR Regulations and rules made under
Companies Act, 2013 ⮲ To be placed on the website of the concerned stock exchange(s) and of the Issuer Company 
• ◼ Merchant Banker 
• ⮲ Process To be managed by a Merchant Banker registered with SEBI 
• ⮲ To submit due diligence certificate to stock exchanges 
• ◼ Issuer 

• ⮲ Certificateto be submitted to stock exchanges stating that placement is being made as per SEBI ICDR
Regulations, and all requirements are being  complied with 
• ⮲ To submit documents / undertakings for in-principle and final approval for listing, to the relevant stock exchanges 
• ◼ Financials 

•⮲ Last 3 years Audited Consolidated Financials and latest quarter limited reviewed financials disclosed to the stock
exchanges ⮲ No restatement of accounts is required 
• ◼ Impact of Companies Act 2013 
• ⮲ Additional disclosures as required under PAS-4 of Companies Act 2013, to be disclosed in the Offer Document
• Rights Issue
Pros of Rights Issue
• ✓ Provides equitable opportunity to all shareholders to participate in  the issue and ensures rightful
distribution of wealth 
• ✓ Unlike a preferential issue or QIP, Rights issue provides high  flexibility on pricing to help build
investor interest 
• ✓ The shares issued are not subject to lock-in 
• ✓ Provides opportunity to Promoters to increase the stake at very  attractive pricing 
• In case of under subscription- Promoters can subscribe to  unsubscribed portion at attractive right price
without the  obligation of triggering open offer 
• In case of over subscription- Promoters can still creep in by 5%  voting rights annually post completion
of Rights Issue 
Cons of Rights Issue
• Promoter & Promoter Group to mandatorily subscribe to their rights  entitlement and shall not renounce
their rights 
• No further issue of specified securities during the period between  date of filing the letter of offer with
SEBI and listing of specified  securities unless complete prior disclosure regarding the same  
• Upfront disclosures for end use of funds to be made and shall be  subject to monitoring, limiting flexibility 
• Price risk for ~7 days 
• No discretion in terms of allocation of shares
• Further Public Issue
Pros of Further Public Issue
•Free pricing 
•✓ Option to select Anchor Investors enables to attract  marquee names 
•✓ The shares issued are not subject to lock-in, except  for Anchor Investors  
•✓ Relative to Rights issue, QIP and preferential issue  helps in broadening of investor base resulting in 
better price discovery 
• ✓ Price risk is least as compared to Rights Issue and Preferential Issue
Cons of further Public Offer

• 🗶 No further issue of specified securities during the  period between date of filing the letter of offer  with
SEBI and listing of specified securities unless  complete prior disclosure regarding the same  
• 🗶 Upfront disclosures for end use of funds to be  made and shall be subject to monitoring, limiting 
flexibility 
• 🗶 Full blown disclosure document to be created  along with restated financials can be time  consuming 
• 🗶 Intense marketing efforts 
• 🗶 Expensive as compared to other modes
 Offer for Sale
•
Eligible Sellers for an OFS 

• ◼ All promoter/ promoter group entities who are required to increase public shareholding to meet the
minimum public  shareholding (“MPS”) requirements 
• ◼ The Companies with market capitalization of Rs. 1,000 crores and above, with the threshold of market
capitalization computed  as the average daily market capitalization of six months period prior to the month in
which the OFS opens.  
• ◼ Any non-promoter shareholder of eligible companies may also offer shares through the OFS
mechanism. 
• Irrespective of cooling off period mentioned above, the promoter or promoter group of
companies whose shares are either  liquid or illiquid can offer their shares only through OFS or
QIP with a gap of 2 weeks between successive offers
• If the original OFS is made for compliance with MPS norms, the promoter(s) or promoter group
entities are allowed to offer  the unsubscribed portion of the OFS only for the purpose of MPS
compliance in the open market with a gap of 2 weeks from  the closure of OFS upto 2%