PLACEMENT OF ISSUES

Placement of New Issue:

Offer through Prospectus

Offer for Sale

Private Placement

Right Issue

Book Building

Red Herring Prospectus

Green Shoe Option

E-IPO

Bought out Deals

Invites offers for subscription or purchase of any shares or

debentures from the public

The salient features of the prospectus are

General Information about company

Capital structure of the company

Terms of the present issue

Particulars of the Issue - issue-opening, closing and earliest

closing date of the issue

Company Management and Project

Details of the outstanding litigations

Management perception of risk factors

Justification of the issue premium

Financial Information - cost of the project, projected earnings

OFFER THROUGH PROSPECTUS

OFFER FOR SALE

Promoter places his shares with an investment banker (bought out dealer or sponsor) who offer it to the public at a later date

They purchase at negotiated price and resell at a higher price The difference between the two prices is called turn or spread Bought out dealer sheds the shares at a premium to the public

promoter Sponsor Public

GREEN SHOE OPTION

A green house is a clause contained in the underwriting

agreement of an IPO that allows underwriters to buy up to an

additional 15% of company shares at the offering.

MEANING:

The GSO means an option of allocating shares in excess

of the shares included in the public issue

Where it is an provision in underwriting agreement , that

allows the underwriter to sell excess shares than the original

one offered.

Also known as “Over Allotment Option”.

ORIGINATION

The term GSO derived from a company called

Green Shoe Manu est 1919.

This was the I company to initiate this option in

1960

EXAMPLE

If a company decides to sell 1 lak shares, the

underwriters (“stabilizer”) can exercise their GSO

and can sell 1.15 lak shares. This enables to

stabilize fluctuating shares prices by increasing or

decreasing the supply of shares according to the

demand to IPO.

PRIVATE PLACEMENT

Small number of financial intermediaries (like Unit Trust of India,

mutual funds, insurance companies, merchant banking subsidiaries of

commercial banks) purchase the shares and sell them to investors at a

later date at a suitable price

A process of inviting subscription to the securities of a corporate issuer

by means other than public offering.

Private placement usually refers to non-public offering of shares in a

public company.

Instruments issued in private placements are common stock, preferred

stock or other forms of membership interests, warrants or promissory

notes (including convertible promissory notes), bonds and debentures

QUALIFIED INSTITUTIONAL PLACEMENT

QIP is another tool, whereby a listed company can

issue equity shares, fully and partly convertible

debentures, or any securities other than warrants which

are convertible to equity shares to a QIP.

Introduced by SEBI

RED HERRING PROSPECTUS

Red-herring prospectus" means a prospectus, which does not

have complete particulars on the price of the securities offered

and quantum of securities offered

REASONS

•First thing to stimulating people without disclosing

much information about the deal.

• The “red herring” is a reference to a legal disclosure,

printed in red

•Informing to readers that the SEC has not yet reviewed

and approved the document.

•Investors can get an idea of upcoming offerings.

RED HERRING PROSPECTUS ISSUERS

Power finance corporation ltd.

Engineers India limited.

Tata steel limited.

BOOK BUILDING

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CLASSIFICATION OF ISSUES