Ipo Presntation

8/6/2019 Ipo Presntation

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By

SUPRITHA S.V.


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WHAT IS AN IPO?

An IPO refers to the first sale of a companys common

shares to investors, on a public stock exchange, with an

intension to raise new capital.

The most important objective of an IPO is to raise capital

for the company


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SIGNIFICANCE OF IPO

Significance of IPO has 2 view points :

to the company

to the Shareholders


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The CONCEPTS in IPO

I. Preplanning :

There is some pre-planning to be done before

actually going into the process of IPO. Thatpre-planning involves knowledge of :

The fundamentals of Business

the policies and the objectives of the company

The products and services of the company

Their competitors

Market share of the competitors


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II. The risk analysis

There are 3 kinds of risks in investing in an

IPO

Business risk

Financial risk

Market risk


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III. The basic entry norms for making a

public issue Entry norms are :

net tangible assets of at least Rs. 3 crores for 3 full

years. Distributable profits in at least 3 years out of 5

preceding years.

net worth of at least Rs. 1 crore in 3 years

if change in name of the company, at least 50% of

revenue for preceding 1 year should be from the

newly renamed companys activities.


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IV. Different Intermediaries involved in an

IPO merchant bankers

underwriters

compliance officers

registrars

syndicate members

stock exchange

stock brokers

sub brokers

portfolio managers

AMCs

trustees

Venture capital firms

Depository particpants

foreign institutional

investors

Custodian of securities

clearing corporations

credit rating agencies


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V. Appointment of intermediaries

Appointment of lead managers : the lead

manager is the merchant banker who

orchestrates the issue, in consultation of thecompany.

appointment of other intermediaries


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VI. Documents required for IPO

Draft offer document

Red herring prospectus


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VII. Prospectus

The first step is to prepare a RED HERRING

PROSPECTUS. To get an approval from the

market regulator ie SEBI, an offer document isto be prepared and submitted which contains

every minutest details of the company. This

would then become an invitation to the public

calling for a subcription.


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VIII. Pricing of an IPO

Once the final prospectus is printed and

distributed to the investors, company

management meets with their investment banksto choose the final offering price and size.

it is generally noted that there is a large

difference between the price @ the time of an

issue and the price when they start trading in

the secondary market. This would be due to

imbalance between demand and supply.


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IX. TYPES OF ISSUE pricing

1. fixed price issue

2. book building process


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X. Shares allocated based on Categories of

investors Retail individual investors

Non institutional bidders

Qualified institutional bidders


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The steps in the process of IPO

Filing the prospectus with SEBI

Filing of the prospectus with the registrar of the companies

Printing and dispatch of prospectus

Filing of initial listing applications Promotion of the issue

Statutory announcements

Collections of applications

Processing of applications

Establishing the liability of the underwriters

Allotment of the shares

Listing of the issue


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Other terms

Green Shoe option :

Green Shoe option means an option of

allocating shares in excess of the sharesincluded in the public issue. Its main purpose is

to stabilize post listing price of the newly issued

shares. It is being introduced in the Indian

Capital Market in the initial public offeringsusing book building method. It is expected to

arrest the speculative forces.


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three more types of issues

1. Further Public Offering :

When an existing company comes out with

their next issue or decides to tap the market fora second time, it is termed as further public

offering

2. Rights issue :

When a listed company proposes to issue fresh

securities to its existing shareholders, it is

termed as, rights issue


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3. Private placement :

This is an issue of share or of convertible

securities by a company to a select group whichis neither rights issue nor public issue.


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Thank you