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8/8/2019 Issue of Shares When, Why & How Sharmila Jeetesh, Rashmi, Shreeja, Deepika)
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Issue of shares- when? Why?and how?
ByN.Sreeja
C.DeepikaJeethesh
A.G.Sharmila
Rashmi
8/8/2019 Issue of Shares When, Why & How Sharmila Jeetesh, Rashmi, Shreeja, Deepika)
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TOPICS COVERED
What is an IPO
Who can issue IPO
Why IPOPlacement of IPO
Example of SKS microfinance
Key terms
8/8/2019 Issue of Shares When, Why & How Sharmila Jeetesh, Rashmi, Shreeja, Deepika)
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WHAT IS AN IPO?
IPO stands for Initial Public Offering and
means the new offer of shares from a
company which was previously unlisted.
This is done by offering those shares to the
public, which were held by the promoters or
the private investors prior to the IPO.
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WHO CAN ISSUE IPO?
Private companies
Public companies
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WHYIPO?
To promote a new company
To expand an existing company
To diversify the productionTo meet the regular working capital
requirements
To capitalize the reserves
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PLACEMENT OF IPO
Initial issues are floated
1. Public issue
2. Right issue3. Private placement
4. Preferential allotment
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PARTIES INVOLVED IN IPO
Lead managers.
Registrar to the issue.
Underwriter to the issue.Financial institutions
Advertising agencies
Government agencies
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LEAD MANAGER
Appointed by the company to manage public issue program
He should posses valid SEBI registration
Main duties:
Drafting of prospectus.
Preparing budget of expenses related to issue.
Suggesting appropriate timings of the issue.
Assisting in marketing of the public issue. Advising the company in appointing registrars ,underwriter ,
brokers, advertising agency , bankers etc.
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The banking division of financial institutions,
subsidiary of commercial banks, foreign
banks, private sector bank and private
agencies are available to act as leadmanager.
Some of them are SBI capital market Limited,Bank of Baroda,canara bank,ICICI securities
etc.
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ROLE OF LEAD MANAGER IN
THE PRE & POST ISSUE
Pre issue Post issue
Due diligence Management of escrow a/c
Design of prospectus , memo etc. Co-ordinate non-institutional
allocation
Ensure the formality. Intimation of allocation
Appointment with intermediatries Dispatch of refund to bidders
Marketing strategy Look at the functioning of agencies
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REGISTRAR
Finalizes the list of eligible allotees after deleting the
invalid application.
Action for crediting the shares to demat account ofapplicants.
Dispatch of refund order to those applicable.
Receive the share application from various
collection centre.
Arrange for dispatching of shares certificate.
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BANKERS TO THE ISSUE
Ensure that funds are collected and
transferred to escrow accounts.
Estimate of collection and advising the
issuer about the closer of the issue.
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UNDERWRITERS
Underwriting means they will subscribe to the
balance share if all share are not picked up at IPO.
Can be a banker ,broker or financial institutions.
Done for a commission.
Aspect considered before appointing:
Reputation.
Network of investor Clientele
Past performance
Experience.
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KEYTERMS
FPO
Book runner
Safety netGreen shoe option
Syndicate member
Hard writingSoft writing
QIBs
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EXAMPLE OF SKS
MICROFINANCE
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