swathi ipo-special-reference-with-religare-securites.doc

8/9/2019 Swathi IPO-Special-Reference-With-Religare-Securites.doc

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Study on Indian Initial Public Offering (IPO) market and itsRegulatory aspect with reference to Religare Securities Ltd

Project report

Submitted in Partial ulfillment of theRe!uirements and for the award of "egree of

Post Graduate Diploma in Management(PGDM)

#$

RADHE SHYAM LAL

(Registration No. 0!0"#)

$nstitute o% &omputer ' usiness Management

S*ool o% usiness E+ellene

Mem,er A&SE

Appro-ed , A$&/E Go-t. % $ndia

HYDERAAD12000"3

A&4N5LEDGEMEN/


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I owe a great many thanks to a great many people who helped and supported me

during the writing of this book .

irst of all I would like to con%ey my sincere gratitude to Dr. S. 6arar andMrs. Ritu 6arar7 Prinipal and *airman ($nstitute %or &omputers and

usiness Management) for their unprecedented support and gi%ing me an

opportunity to do my summer internship program at R&LI'R& S&*RI+I&S

L+", which has been a pure learning e-perience and has enlightened my

knowledge and skills about financial aspect.

I would also like to e-press my gratitude to Pro%. 8itender Go-indani7

Administrati-e Diretor7 $nstitute o% &omputers and usiness Management

and my special thanks to finance faculty and my mentor Mr. Rames* a,u Sir

and Mrs. Annie 4a-ita Ma9am for his outstanding and undeniable

considerations. I would also like to thank all my friends who ha%e bore with me

during this project, apart from that, those who ha%e helped up in to some way or

the other. Last but not the least I would like to e-tend my heartfelt thanks to my

parent, who were with me when I was some e-pensi%e about the project. +heir

help and encouragement also pro%ed to be a handful.

I e-press my gratefulness to the Mr. Pra-een Ma*endra:er, ;assoiate in Religare &apital Mar:ets Limited in

Hdera,ad for their %aluable suggestion, constant encouragement, silent

support / unwa%ering confidence, without which this project would not ha%e been possible. It was they who moti%ated for this cause (to do something

entirely new) and always was present with their e-pert guidance and disciplined

ideas.

Radhe Shyam Lal

DE&LARA/$N


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I hereby declare that the project on ;Stud on $ndian $nitial Pu,li %%ering($P) mar:et and its Regulator aspet ?it* re%erene to Religare

Seurities Ltd in Hdera,ad> is completely my work. It has been submitted toI#01S2OOL O #*SI3&SS &4&LL&3& for partial fulfillment of theeducational session and allotment of marks.

Radhe shyam lal56789

CERTIFICATE FROM THE ORGANIZATION


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&N/EN/

SR.N PAR/$&@LAR PAGE. N


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:.: Introduction:.9 Objecti%es of the Project

:.; Research 0ethodology:.8 Scope of the Project:.< Limitation:.= Re%iew of Literature

:19;8<=>

# I3"*S+R$ PROIL&9.: Initial Public Offer9.9 SI (Regulatory spect)9.; 3S&9.8 #S&

??1:5::1:9:;1:8:51>>

$N/RD@&/$N


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+his report, as the title APu,li issue> suggests, is an attempt to bring forth the

importance of the process of Issue of an Initial Public Offer (IPO).

Bhen a ompany issues an IPO, it means it is going pu,li. +he issue of anIPO introduces a great degree of transparency in a ompanyCs operations. ll

the rele%ant and updated information pertaining to the company is laid down

before the in%estors so that they may make an in%estment decision. gain, there

are set procedures, rules, regulations and laws to be followed in laying down

this information before the in%estors. document called the Prospetus9 must

be prepared. +he Prospectus captures all the necessary information that is to be

made a%ailable to the in%estors. part from the Prospectus, there are %arious

other company documents that need to be %erified and summari@ed in order to present them before the in%estors.

0any Intermediaries are appointed for the purpose of managing the public

issue of an IPO of a company. +hey play a %ital role by co1ordinating the

acti%ities of the company, the Regulatory #odies and In%estors. +he

following are the responsibilitiesD

&ompan, to manage the entire process of issue of its IPO, and to

present the ompanyCs information before the in%estors in a concise and

unambiguous form.

$n-estors, to gi%e them all the rele%ant and updated information on the

ompany, while at the same time protecting their interests

Regulator odies such as the Seurities and E+*ange oard o%

$ndia, to adhere to all secretarial and legal work.

In order to fulfill all their responsibilities well, they must work

diligently. +he process through which they %erify and summari@e the

ompanyCs information is thus called the process of Due Diligene.

+hese Intermediaries must issue A"ue "iligence ertificatesE at %arious

points during the issue process, saying that the company documents ha%e

all been %erified and are correct.


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+his report will take the reader through the entire process of the

Issue of an IPO and will lay special emphasis on the dynamic role played

by them.

+his report aims at highlighting the key points about an IPO issue by

separating the concrete points regarding an issue from the frills, and

focusing on these concrete points.

,Feti-es o% t*e ProFet


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+o study and analysis the Indian initial public offering (IPO) market and

Role of its regulatory aspect.

+o study and understand the concept of and procedure, problem, benefits,

in%ol%ed in Initial Public Offers (IPOCs).

+o understand the role of intermediaries in managing Initial Public

Offers.

+o know %arious ser%ices offered by religare securities.

+o study risks faced by in%estor in primary market.

Sope o% t*e ProFet


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+he following report is an attempt to analyses thoroughly, the beha%ior and

dynamics of Initial Public Offerings market in India. In other words, itCs a

detailed study on the Primary and secondary 0arket in India. long with study

on IPO process and its regulatory aspect. +his study takes into account Public

Offerings made by major companies in %arious sectors, in a period ranging of

last few year. +he sectors taken into consideration are1

a) Industrials

b) onsumer goods / retail

c) +echnology , media / +elecommunication

d) Real &state / infrastructure

e) #anking, financial Ser%ices / insurance

f) 2ealthcare / life sciences

g) Power and &nergy

+he study analyses the beha%ior of public offerings of companies within each

sector and also attempts to make a comparati%e analysis among the sectors,

with the purpose of gauging in%estor preference. O%er subscription and under

subscription analysis determines the in%estor preference at the time of issue.

Resear* Met*odolog


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Soures o% Stud

• +he data for the project has been collected from both primary and

secondary sources.

Primary data has been collected byD

onsulting the officials Aassociate Fice President G In%estment #ankingE

in Religare apital 0arkets Limited in 2yderabad.

lso, IPO prospectus and all the necessary documents re!uired for, and

furnished by, the companies for managing the issue of IPOCs and IPO

process ha%e been used as primary data.

Secondary data

It includes, information secured from web sites, maga@ines and the daily

e-perience, obser%ations and through newspapers.

#ooks related to inancial 0anagement.

Beb sites were used as the %ital information source.

Limitations o% t*e proFet


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lthough Initial Public Offers are issued by many companies, this study

is confined to a few companies only. +hese are companies that fall within

limited company.

+his study will be limited to the information willingly shared by the

authorities and of RSL.

+o understand the o%erall India IPO market, the period of 8< days is not

enough, so finding cannot be generali@ed for all times.

+he data followed in project is partly based on Secondary information

and it canCt be held true as :55H correct.

+he scope of the study is %ery %ast. It is %ery difficult to co%er and focuson all the areas. +herefore an attempt is made to co%er as much as

possible.

Re-ie? o% Literature


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IPO G I3I+IL P*#LI O&RI3' is the hottest topic in the currentindustry, mainly because of India being a de%eloping country and lot of growthin %arious sectors which leads a country to ultimate success. nd when we talk about countryCs growth which is dependent on the kind of work and how much

importance to which sector is gi%en. nd when we say or talk about industriesgrowth which leads the economy of country has to be balanced and gi%en

proper finance so as to reach the le%els to fulfill the needs of the society. ndindustries which ha%e massi%e outflow of work and a big portfolio then its %erydifficult for any company to work with limited finance and this is where IPO

plays an important role.

+his report talks about how IPO helps in raising fund for the companies going public, what are its pros and cons, and also it gi%es us detailed idea why

companies go public. 2ow and what are the steps taken by the companies before going for any IPO and also the role of (SI) Securities and &-change#oard of India the #S& and 3S& , what are primary and secondary markets andalso the important terms related to IPO. It gi%es us idea of how IPO is dri%en inthe market and what are %arious factors taken into consideration before goingfor an IPO. nd it also tells us how we can more or less judge a good IPO.

IPO has been one of the most important generators of funds for the small

companies making them big and gi%en a new %ision in past and it is stillcontinuing its work and also for many coming years.

$ND@S/RY PR$LE

$ND$AN $P MAR4E/

H$S/RY


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+he term initial public offering (IPO) slipped into e%eryday speech during thetech bull market of the late :665s. #ack then, it seemed you couldnt go a day

without hearing about a do@en new dotcom millionaires in Silicon Falley whowere cashing in on their latest IPO. +he phenomenon spawned the termsiliconaire, which described the dotcom entrepreneurs in their early 95s and ;5swho suddenly found themsel%es li%ing large on the proceeds from their internetcompanies IPOs.

I3F&S+ORS are still wary of e!uities in the :665s, to blame are the e-cesses inthe primary market in the :665s. Of the thousands of IPOs (initial publicofferings) and offers for sale made between :668 and :66=, less than a hundred

were from companies with track record. &%en in this shortlist, only a fewmanaged to complete planned projects and deli%er %alue to in%estors. +he rest

just frittered the money away.

+he primary market of the mid1:665s was merely used as a channel to mo%e public funds into pri%ate hands. +he Securities and &-change #oard of India(SI) was late to wake up to the e-cesses, but when it did, it impro%ed thedisclosure framework, tightened the prere!uisites for an IPO, and towards theend of the decade, introduced book1building.

&@RREN/ PS$/$N $ND$AN $P MAR4E/

India is being lauded as the sa%ior of the ailing global IPO market with J;.; billion worth of proceeds from eight deals. +his makes India the largest IPOmarket in the world so far this year.


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India accounts for 86.:H of global IPO proceeds at the moment, compared to just ;.>H same time last year. Significant, gi%en that global IPOs declined;=.:H o%er the last one year.

It was the real estate sector which took the ma-imum ad%antage of the bullishstock market trends in 95:9. ccording to the industry body ssocham, realestate players raised the ma-imum amount of funds from the capital marketthrough IPOs last year. Realty firms picked up around 89.>H of the total fundsgenerated through IPOs. Of the Rs.;8,::6 crore raised in the primary market inthe period starting from Kanuary :, 95:9 to mid1"ecember, about Rs.:8,,?5> crore

#0010 Rs 9:,8;9 crore

#001 Rs 9;,=>= crore

#01# Rs 98,668 crore

#0#1B Rs


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Bhen shares are bought in an IPO it is termed primary market. +he primarymarket does not in%ol%e the stock e-changes. company that plans an IPOcontacts an in%estment banker who will in turn called on securities dealers to

help sell the new stock issue.

+his process of selling the new stock issues to prospecti%e in%estors in the primary market is called under?riting.

Bhen an in%estor buys shares from another in%estor at an agreed pre%ailingmarket price, it is called as buying from the secondary market.

+he secondary market in%ol%es the stock e-changes and it is regulated by a

regulatory authority. In India, the secondary and primary markets are go%erned by the Seurit and E+*ange oard o% $ndia (SE$).

AD


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Seurities and E+*ange oard o% $ndia

+he Securities and &-change #oard of India was established on pril :9, :669in accordance with the pro%isions of the Seurities and E+*ange oard o%$ndia At7#.

+he PREAMLE of the Securities and &-change #oard of India describes the

basic functions of the Securities and &-change #oard of India as

;..to protet t*e interests o% in-estors in seurities and to promote t*e

de-elopment o%7 and to regulate t*e seurities mar:et and %or mattersonneted t*ere ?it* or inidental t*ereto>

+he mission of SE$ is to make India as one of the best securities market of the

world and SI as one of the most respected regulator in the world.

O#K&+IF&

SI protect the interests of in%estors in securities, and promotes the

de%elopment of Securities 0arket and it also regulates the securitiesmarket.

nother significant e%ent is the appro%al of trading in stock indices (like

3ifty / Sense-) in 9555. market Inde- is a con%enient and effecti%e

product because of the following reasonsD

It is used in deri%ati%e instruments like inde- futures and inde- options

It can be used for passi%e fund management as in case of Inde- unds.


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*3+IO3S

+he regulation of the capital markets is primarily the responsibility of the

Securities and &-change #oard of India (SI), which is located in

0umbai. Some of the major functions of SI areD

SI is e-pected to regulate the business in stock e-changes and any

other securities markets.

Registering and regulating the working of collecti%e in%estment schemes,

including mutual funds is a responsibility of SI.

SI is responsible for prohibiting fraudulent and unfair trade practices relating

to securities markets.

• Prohibiting insider trading in securities, with the imposition of monetary

penalties, on erring market intermediaries.

• Regulating substantial ac!uisition of shares and takeo%er of companies.


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+he 3ational Stock &-change (3S&) is Indias leading stock e-change co%ering

%arious cities and towns across the country. 3S& was set up by leading

institutions to pro%ide a modern, fully automated screen1based trading system

with national reach. +he &-change has brought about unparalleled transparency,

speed / efficiency, safety and market integrity. It has set up facilities that ser%e

as a model for the securities industry in terms of systems, practices and

procedures.

/*e rganiIation

+he 3ational Stock &-change of India Limited has genesis in the report of the

2igh Powered Study 'roup on &stablishment of 3ew Stock &-changes, which

recommended promotion of a 3ational Stock &-change by financial institutions

(Is) to pro%ide access to in%estors from all across the country on an e!ual

footing. #ased on the recommendations, 3S& was promoted by leading

inancial Institutions at the behest of the 'o%ernment of India and was

incorporated in 3o%ember :669 as a ta-1paying company unlike other stock

e-changes in the country.

On its recognition as a stock e-change under the Securities ontracts

(Regulation) ct, :6


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Mar:et Segments and Produts

3S& pro%ides a trading platform for of all types of securities for in%estors under one roof G &!uity, orporate "ebt, entral and State 'o%ernment Securities, +1

#ills, ommercial Paper (Ps), ertificate of "eposits ("s), Barrants, 0utualunds (0s) units, &-change +raded unds (&+s), "eri%ati%es like Inde-utures, Inde- Options, Stock utures, Stock Options and urrency utures.

+he &-change pro%ides trading < in 8 different segments %i@., Bholesale "ebt0arket (B"0) segment, apital 0arket (0) segment, utures / Options(/O) segment and the urrency "eri%ati%es Segment (trading on whichcommenced on ugust 96, 95:;)

Graph depicting the turnover in NSE

+he abo%e graph depicts the turno%er of 3S& from 9555 to 95:9,the graphshows from a mare turno%er of abo%e :,555,555 crore in the year 9555 how ithas decreased and increased to more than ;,


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om,a Sto: E+*ange Limited (the &-change) is the oldest stock e-change

in sia with a rich heritage. Popularly known as M#S&M, it was established as

M+he 3ati%e Share / Stock #rokers ssociationM in :?>


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&o-erageJ

+he e!uity shares of 955 selected companies from the specified and nonspecified lists of this &-change ha%e been considered for inclusion in the

sample for N#S&1955. +he selection of companies has primarily been done onthe basis of current market capitali@ation of the listed scripts on the e-change.#esides market capitali@ation, the market acti%ity of the companies as reflected

by the %olumes of turno%er and certain fundamental factors were considered for the final selection of the 955 companies.

&*oie o% ase YearJ

+he financial year :6?6165 has been chosen as the base year for the price

stability e-hibited during that year and due to its pro-imity to the current period.

Graph depicting the turnover of BSE:

+he abo%e graph shows the turno%er in #S& from the year 9555 to the year95:9.+he graph easily shows that the turno%er of #S& has increased in leaps and

bounds o%er the gi%en period.


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&MPANY PR$LE

REL$GARE SE&@R$/$ES L/D.

SI Registration 3oD I30OOOO::5=9

orporate OfficeD:6 3ehru Place, 3ew "elhi G ::55:6BebsiteD www.religare.in&mailD inforeligare.in

S0SD R&LI'R& to


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HISTORY AND BACGRO!ND

REL$GARE Seurities Ltd. (RSL) is a wholly owned subsidiary of R&LI'R& inancial Ser%ices Ltd. (RSL), a ompany promoted by the late"r.Par%inder Singh, &-10" of Ranba-y Laboratories Ltd.

+he primary focus of Religare Securities Ltd. is to cater to ser%ices in apital0arket Operations to Institutional In%estors. +he ompany is a member of the

3ational Stock &-change (3S&) and O+&I. +he growing list of financialinstitutions with whom RSL is empanelled as appro%ed #roker is a reflection of the high le%els of ser%ices maintained by the ompany.

R&L operates from se%en domestic regional offices, 8; sub1regional offices, andhas a presence in 86? cities and towns controlling :,?;> business locations allo%er India.

+o make a mark in the global arena, R&L ac!uired *Q1based 2ichens, 2arrison/ o. in 95:; which was subse!uently re1named as Religare 2ichens 2arrisonPL (MR22M). 2ichens, 2arrison / o. was incorporated in London in the year :?5; and is belie%ed to be one of the oldest firms of stockbrokers in the ity of London. Pursuant to e-pansion of R&Ls business, the company has grown from

largely an e!uity trading company into a di%ersified financial ser%ices company.Bith the addition of R22 the R&L group now operates out of multiple globallocations, other than India, (the *Q, the *S, #ra@il, South frica, "ubai andSingapore).

R&LI'R& was founded with the %ision of pro%iding integrated financial caredri%en by the relationship of trust. +he bou!uet of ser%ices offered byR&LI'R& includes #roking (Stocks and ommodities), "epository

Participant Ser%ice, d%isory on 0utual und In%estments and Portfolio0anagement Ser%ices.

R&LI'R& is a pioneer in the concept of partnership to reach multiplelocationsin order to effecti%ely ser%ice its large base of indi%idual clients. #esides thereach of R&LI'R&, the clients of the company greatly benefit by its strongresearch capability, which encompasses fundamentals as well as technicalknowledge.


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REL$GARE

EN/ERPR$SE

L$M$/ED

Religare in%est

ltdReligare

Securities Ltd

Religare Bealth

0gt Ser%ices Ltd

s

Religare capital

0arkets Ltd

Religare finance

Ltd

Religare

ommodities Ltd

Religare

Insurance

#roking Ltd

Religare Fenture

apital P%t Ltd

Religare Realty

Ltd


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+he third leaf of the clo%er represents &are, +he secret ingredientthat is the cement in e%ery relationship. +he truth of feeling that underlinessincerity and the triumph of diligence in e%ery aspect. rom it springs true

warmth of ser%ice and the ability to adapt to e%ol%ing en%ironments withconsideration to all.

+he fourth and final leaf of the clo%er represents Good ortune.Signifying that rare ability to meld opportunity and planning with circumstanceto generate those often looked for remunerati%e moments of success.

Hope. /rust. &are. Good ortune. ll elements perfectly combinein the emblematic and rare, four1leaf clo%er to %isually symboli@e the %aluesthat bind together and form the core of the Religare %ision.

/HE REL$GARE EDGE

"i%erse offerings

"ynamic 0anagement +eam

State1of1the art technology

Fast "istribution and Reach

Robust #rand Recognition

Synergistic partnerships

Inno%ati%e Initiati%e


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REL$GARE GLAL NE/5R4

Religare operate across multiple locations & countries.

• INDIA

• DUBAI

• QATAR

• HONG KONG

• A!A"#IA

• #INGA$OR%

• TOK"O

• INDON%#IA

• BRAI!

•N%' "ORK

• #AN (RAN)I#)O

• UNIT%D KINGDO

&ompan9s $P


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Sr.

No

Name

o% t*e

issue

oo:

Running

Lead

Manager

Date

o%

issue

No. o%

mem,ers

No. o%

,iddin

genters

$ssue

SiIe

loo

r

Prie

(inRs)

E+it

Pri

e(in

Rs

KAUSAR

INDIA

LIMITED

Religare

apital

mar:ets

limited

Mar 23,

2014 to

Mar 25,

2014 B0 7"7#C

3

B.00 20.2

"

#EMMBI

POLYARN

S

LIMITED

Q&$3O+&ORPOR+IO

3S&RFI&LI0I+&"

01/02/2010 TO

03/02/

2010

3" 2 2." "0/

"2

"2

BINFINITE

COMPUTE

RSOLUTION

INDIALTD!

I3"II3OLI3& L+"

/SP

0&R23+#3Q&R L+"

11/"AN

/ 2010

TO13/

"AN/2010

# "2 270B 22/

C2

C2

Sta#$ar$ C%art&r&$ PLC

Symbol – Series STAN EQ

Issue Period May 25, 2010 to May 28, 2010

Post issue Modifictio! Period May 29, 2010

Issue Si"e240,000,000 INDIAN DEPOSITORY RECEIPTS (inc!"in# Anc$o% in&'to%

)o%tion o* +,000,000 IDR-

Issue Ty#e 100. /oo /!i"in#

Price R!$e R 100 to R 115

Tic% Si"e R' 13

Mr%et &ot 200 IDR

Mi!imum Order 'u!tity 200 IDR

M(imum Subscri#tio! Amou!t forRetil I!)estor

R100000


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$N$/$AL P@L$& ER$NG

AN


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n IPO or an Initial Public Offer is a companys first sale of

e!uity shares to the general public. Shares offered in an IPO are often, but notalways, those of newly setup companies seeking outside e!uity capital and a

public market for their shares.

n Initial Public Offering (IPO) can be a good in%estment a%enue for

e!uity in%estors. Bhile the IPO market is dry these days, a fresh crop is

e-pected soon. It is important to understand IPOCs and decide whether to in%est

in them or not.

5* does a ompan go %or an $P

Initial Public Offering (IPO) is when an unlisted company makes either a fresh

issue of securities or an offer for sale of its e-isting securities or both for the

first time to the public. +his pa%es way for listing and trading of the issuerCs

securities.

companys first sale of stock to the public. Securities offered in an IPO are

often, but not always, those of young, small companies seeking outside e!uity

capital and a public market for their stock. In%estors purchasing stock in IPOs

generally must be prepared to accept %ery large risks for the possibility of large

gains. IPOs by in%estment companies (closed end funds) usually contain

underwriting fees which represent a load to buyers.

+he basis purpose of an IPO is to facilitate transfer of resources from sa%ers to

entrepreneurs seeking to establish new enterprise or to di%ersify7e-pand e-isting

ones.


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Such facilities are of crucial importance in the conte-t of the dichotonomy of

funds a%ailable for capital uses form those in whose hands they accumulate, and

those by whom they are applied for capital uses from those in whose hands they

accumulate, and those by whom they are applied to producti%e uses.

2owe%er it should not be concei%ed as e-clusi%ely ser%ing

the purpose of raising finance for new capital e-penditure. Infect the

organi@ation and facilities of the market are also utili@ed for selling concerns to

the public as going concerns through the con%ersion of e-isting proprietary

enterprises or pri%ate companies in to public companies

orporate may raise capital in the primary market by way of an initial public

offer, rights issue or pri%ate placement. n Initial Public Offer (IPO) is the

selling of securities to the public in the primary market. +his Initial Public

Offering can be made through the fi-ed price method, book building method or

a combination of both.

In case the issuer chooses to issue securities through the book building route

then as per SI guidelines, an issuer company can issue securities in the

following mannerD

a) :55H of the net offer to the public through the book building route.

b) >


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PR&ESS AN $P

+he ProcessD

• +he Issuer who is planning an IPO nominates a lead merchant banker as a

book runner.

• +he Issuer specifies the number of securities to be issued and the price

band for orders.

• +he Issuer also appoints syndicate members with whom orders can be

placed by the in%estors.

• In%estors place their order with a syndicate member who inputs the

orders into the electronic book. +his process is called bidding and is

similar to open auction.

• #ook should remain open for a minimum of < days.

• #ids cannot be entered less than the floor price.

• #ids can be re%ised by the bidder before the issue closes.

• On the close of the book building period the book runner e%aluates the

bids on the basis of the e%aluation criteria which may include 1

Price ggression

In%estor !uality

&arliness of bids, etc.


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• +he book runner and the company conclude the final price at which it is

willing to issue the stock and allocation of securities.

• 'enerally, the number of shares are fi-ed, the issue si@e gets fro@en based

on the price per share disco%ered through the book building process.

• llocation of securities is made to the successful bidders.

• #ook #uilding is a good concept and represents a capital market which is

in the process of maturing.

Ho? does t*e ompan %i+ t*e prie ,andK

+he red herring prospectus may contain either the floor price for the securities

or a price band within which the in%estors can bid. +he spread between the floor

and the cap of the price band shall not be more than 95H. In other words, it

means that the cap should not be more than :95H of the floor price. +he price

band can ha%e a re%ision and such a re%ision in the price band shall be widely

disseminated by informing the stock e-changes, by issuing press release and

also indicating the change on the rele%ant website and the terminals of the

syndicate members. In case the price band is re%ised, the bidding period shall be

e-tended for a further period of three days, subject to the total bidding period

not e-ceeding thirteen days

Pricing is critical and the most important process in IPO. Pricing in%ol%es lot of

research and calculations. Pricing is done in such a way that in%estors are

benefited and also the companyCs objecti%e is achie%ed that is its aim for an IPO

is achie%ed. +hus, pricing is the most important factor in IPO process generally

there are two methods of IPO pricing .


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i-ed Pricing

#ook building Process

PR&ED@RE

+he sale (that is, the allocation and pricing) of shares in an IPO may take

se%eral forms. ommon methods includeD

"utch auction

irm commitment

#est efforts

#ought deal

Self "istribution of Stock

large IPO is usually underwritten by a MsyndicateM of in%estment banks led by

one or more major in%estment banks (lead underwriter). *pon selling the

shares, the underwriters keep a commission based on a percentage of the %alue

of the shares sold. *sually, the lead underwriters, i.e. the underwriters selling

the largest proportions of the IPO, take the highest commissionsup to ?H in

some cases.

0ultinational IPOs may ha%e as many as three syndicates to deal with differing

legal re!uirements in both the issuers domestic market and other regions. or

e-ample, an issuer based in the &.*. may be represented by the main selling

syndicate in its domestic market, &urope, in addition to separate syndicates or

selling groups for *S7anada and for sia. *sually, the lead underwriter in the

main selling group is also the lead bank in the other selling groups.

#ecause of the wide array of legal re!uirements, IPOs typically in%ol%e one or

more law firms with major practices in securities law, such as the 0agic irclefirms of London and the white shoe firms of 3ew $ork ity.

http://en.wikipedia.org/wiki/Dutch_auctionhttp://en.wikipedia.org/w/index.php?title=Firm_commitment&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Best_efforts&action=edit&redlink=1http://en.wikipedia.org/wiki/Bought_dealhttp://en.wikipedia.org/w/index.php?title=Self_Distribution_of_Stock&action=edit&redlink=1http://en.wikipedia.org/wiki/Syndicatehttp://en.wikipedia.org/wiki/Commission_(remuneration)http://en.wikipedia.org/wiki/Law_firmhttp://en.wikipedia.org/wiki/Magic_Circle_(law)http://en.wikipedia.org/wiki/Londonhttp://en.wikipedia.org/wiki/White_shoe_firmhttp://en.wikipedia.org/wiki/New_York_Cityhttp://en.wikipedia.org/wiki/Dutch_auctionhttp://en.wikipedia.org/w/index.php?title=Firm_commitment&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Best_efforts&action=edit&redlink=1http://en.wikipedia.org/wiki/Bought_dealhttp://en.wikipedia.org/w/index.php?title=Self_Distribution_of_Stock&action=edit&redlink=1http://en.wikipedia.org/wiki/Syndicatehttp://en.wikipedia.org/wiki/Commission_(remuneration)http://en.wikipedia.org/wiki/Law_firmhttp://en.wikipedia.org/wiki/Magic_Circle_(law)http://en.wikipedia.org/wiki/Londonhttp://en.wikipedia.org/wiki/White_shoe_firmhttp://en.wikipedia.org/wiki/New_York_City


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*sually, the offering will include the issuance of new shares, intended to

raise new capital, as well the secondary sale of e-isting shares. 2owe%er,

certain regulatory restrictions and restrictions imposed by the lead underwriter

are often placed on the sale of e-isting shares.

Public offerings are primarily sold to institutional in%estors, but some shares are

also allocated to the underwriters retail in%estors. broker selling shares of a

public offering to his clients is paid through a sales credit instead of a

commission. +he client pays no commission to purchase the shares of a public

offering the purchase price simply includes the built1in sales credit.

i+ed Priing

n issuer company is allowed to freely price the issue. +he basis of issue price

is disclosed in the offer document where the issuer discloses in detail about the

!ualitati%e and !uantitati%e factors justifying the issue price. i-ed price does

not allow an opportunity to the issuer or the merchant banker to do any

discretionary allotment, which is possible only in a book building issue. So

there is one factor that we should remember which dri%es book building issue

more.

oo: ,uilding Proess

#ook building Process as 0entioned in the SI

#ook #uilding is basically a capital issuance process used in Initial Public Offer

(IPO) which aids price and demand disco%ery. It is a process used for marketing

a public offer of e!uity shares of a company. It is a mechanism where, during

the period for which the book for the IPO is open, bids are collected from

in%estors at %arious prices, which are abo%e or e!ual to the floor price. +he

process aims at tapping both wholesale and retail in%estors.


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SE$ (D$P) Guidelines Gi-en %or oo: uilding

n issuer company proposing to issue capital through book building

Shall comply with the followingD

A) 2 oo: uilding Proess

::.9 In an issue of securities to the public through a prospectus the option or

>


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(iii)

+he issue of securities through book1building process shall be Separately

identified 7 indicated as placement portion category, in the Prospectus.

(i%)

(a) +he securities a%ailable to the public shall be separately identified as

net offer to the public.

(b) +he re!uirement of minimum 9


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(a) +he copy of the draft prospectus filed with the #oard may be

circulated by the #ook Runner to the institutional buyers who

are eligible for firm allotment and to the intermediaries eligible

to act as underwriters in%iting offers for subscribing to the

securities.

1;

working days e-tendable by ; days in case of a re%ision in the price band. +he

public issue made by an infrastructure company, may be kept open for a

ma-imum period of 9: working days and Rights issues shall be kept open for at

least ;5 days and not more than =5 days.


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1;=1

) 2(%%er to Pu,li t*roug* oo: uilding Proess)

.B

C(n issuer company may, subject to the re!uirements specified in

+his chapter, make an issue of securities to the public through a Prospectus in

the following mannerD

a.:55H of the net offer to the public through book building process, or

b.>


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(b) TShareholders of the promoting companies in the case of a new ompany

and shareholders of group companies in the case of an &-isting companyC either

on a Tcompetiti%e basisC or on a Tfirm allotment #ases.

1B1

3

((c) persons who, on the date of filing of the draft offer document with

the #oard, ha%e business association, as depositors, bondholders and

Subscribers to ser%ices, with the issuer making an initial public offering,

pro%ided that allotment to such persons shall not e-ceed


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(i%) (b) +he company may apply for listing of its securities on an

e-change other than the e-change through which it offers its securities to public

through the on1line system.)

1;?1

#00

(F) +he Lead 0erchant #anker shall act as the Lead #ook Runner.)

#0

((%) (a) In case the issuer company appoints more than one #0#(merchant

banker(s)), the names of all such (merchant bankers(s)) who ha%e submitted the

due diligence certificate to SI, may be mentioned on the front co%er page of

the prospectus. disclosure to the effect that M the in%estors may contact any of

such (merchant bankers(s)), for any complaint pertaining to the issueM shall be

made in the prospectus, after the Mrisk factorsE.)

#0B

((%) (b) +he lead book runner7issuer may designate, in any manner, the

other 0erchant #anker(s), subject to the following

Eligi,le %or reser-ation

In a book built issue allocation to Retail Indi%idual In%estors (RIICs), 3on

Institutional In%estors (3IICs) and Uualified Institutional #uyers (UI#Cs) is in

the ratio of ;


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+he allotment to the Uualified Institutional #uyers (UI#Cs) is on a discretionary

basis. +he discretion is left to the 0erchant #ankers who first disclose the

parameters of judgment in the Red 2erring Prospectus. +here are no objecti%e

conditions stipulated as per the "IP 'uidelines.

1;61

+he 0erchant #ankers are free to set their criteria and mention the same in the

Red 2erring Prospectus.

Reser%ation on ompetiti%e #asis is when allotment of shares is made in

proportion to the shares applied for by the concerned reser%ed categories.

Reser%ation on competiti%e basis can be made in a public issue to the

&mployees of the company, Shareholders of the promoting companies in the

case of a new company and shareholders of group companies in the case of an

e-isting company, Indian 0utual unds, oreign Institutional In%estors(including non resident Indians and o%erseas corporate bodies), Indian and

0ultilateral de%elopment Institutions and Scheduled #anks.


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1"01

oo: uilding at NSE

+he 3S& has set up nation1wide network for trading whereby members cantrade remotely from their offices located all o%er the country. +he 3S& tradingnetwork spans %arious cities and towns across India.

3S& decided to offer this infrastructure for conducting online IPOs through the#ook #uilding process. 3S& operates a fully automated screen based biddingsystem called 3&+ IPO that enables trading members to enter bids directlyfrom their offices through a sophisticated telecommunication network.

#ook #uilding through the 3S& system offers se%eral ad%antagesD

+he 3S& system offers a nationwide bidding facility in securities.

It pro%ides a fair, efficient / transparent method for collecting bids using

latest electronic trading systems

osts in%ol%ed in the issue are far less than those in a normal IPO

Proedures

Issuers


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Issuers desirous of using 3S&s online IPO system are re!uired to comply withthe following proceduresD

:. Submit a written re!uest as per prescribed format (Letter:, Letter9,#RL0) for usage of electronic facilities and software of 3S&

9. 'i%e details regarding #ook Running Lead 0anager, o #ook RunningLead 0anagers and Syndicate 0embers.

;. Pay the re!uisite charges to 3S&.

18:1

+rading 0embers

+he #ook Running Lead 0anager will gi%e the list of trading members who areeligible to participate in the #ook #uilding process to the &-change. 0embersha%e to submit a one time undertaking to the &-change. &ligible trading embersha%e to gi%e in the prescribed format details of the user I"s that they would liketo use.

Subscribers

Subscribers can approach any of the appro%ed trading members for submitting bids in the 3&+ IPO system. On line transaction registration slip are generatedautomatically after entering the bids in to the system which acts as proof of theregistration of each #id option.

http://www.nseindia.com/content/ipo/letter1.dochttp://www.nseindia.com/content/ipo/letter2.dochttp://www.nseindia.com/content/ipo/brlm.dochttp://www.nseindia.com/content/ipo/ipo_undertaking.dochttp://www.nseindia.com/content/ipo/ipo_users.dochttp://www.nseindia.com/content/ipo/letter1.dochttp://www.nseindia.com/content/ipo/letter2.dochttp://www.nseindia.com/content/ipo/brlm.dochttp://www.nseindia.com/content/ipo/ipo_undertaking.dochttp://www.nseindia.com/content/ipo/ipo_users.doc


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1891

SEs oo: uilding Sstem

• #S& offers the book building ser%ices through the #ook #uilding

software that runs on the #S& Pri%ate network.

• +his system is one of the largest electronic book building networks

anywhere spanning o%er ;555 +rader

Bork Stations %ia eased lines, FS+s and ampus L3S

• +he software is operated through book1runners of the issue and by the

syndicate member brokers. +hrough this book, the syndicate member

brokers on behalf of themsel%es or their clients place orders.

• #ids are placed electronically through syndicate members and the

information is collected on line real1time until the bid date ends.

• In order to maintain transparency, the software gi%es %isual graphs

displaying price %7s !uantity on the terminals.

Listing Rules for 3ew ompanies on #S& 7IPO Rules

+he following eligibility criteria ha%e been prescribed for the companies

seeking permission to get list on the stock e-change, effecti%e ugust :st

95::.


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+he companies are classified into two categoriesD large cap and Small cap. company is treated as a large cap company if the issue si@e is greater than or e!ual to Rs :5 crore and market capitali@ation of not less then Rs 9< crore.

) In case of large cap companies

+he minimum post1issue paid up capital of the applicant

company shall be Rs. ; crore. +he minimum issue si@e shall be Rs. :5 crore and

+he minimum market capitali@ation of the company shall be

Rs. 9< crore

uthori@ed capital is the amount for which a company has got the authori@ationfrom the regulatory body to raise through the issue. company may or may notwant to raise the full amount of authori@ed capital. Issue si@e is the amount thata company want to raise funds through the issue. ItCs always less than or e!ualto authori@ed capital.

Part payment facility may be a%ailable for the in%estors who want to subscribeto an issue. Post1issue paid1up capital is the %alue of subscriptions (including

promoterCs holding) paid at the end of issue date. +his will be less than issuesi@e if the total subscriptions are less than the offered shares or when there is

part payment facility a%ailable for the issue.

0arket capitali@ation is the product of number of shares outstanding (including promoterCs holding) and the market price. In an IPO before the first day of

listing the market price is the issue price.

#) In respect of small cap companies +he minimum post issue paid up capital of the company shall be

Rs. ; crore. +he minimum issue si@e shall be Rs. ; crore.

+he minimum market capitali@ation of the company shall be Rs. <

crore.


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+he minimum income7turno%er of the company shall be Rs. ; crore

in each of the preceding three :9 month period. +he minimum number of the public shareholder after the issue

shall be :555.1881

due diligence study may be conducted by an independent team

of chartered ccountant or merchant banker (In%estment #anker)

appointed by #S&, the cost of which will be borne by the company.

+he re!uirement of a due diligence study may be wai%ed if a

financial institution or a scheduled commercial bank has appraised

the project in the preceding :9 months.

In addition to this, the issuer company should ha%e a post issue net worth

(e!uity capital V free reser%e e-cluding re%aluation reser%e) of Rs 95 crore.

) or all companies In respect of the re!uirement of paid up capital and market

capitali@ation, the issuers shall be re!uired to include in the

disclaimer clause forming a part of the offer document that in the

e%ent of market capitali@ation re!uirement of #S& not being met,

the securities of the issuer would not be listed on #S&. +he applicant, promoters and 7 or group companies, shall be in

default in compliance of the listing agreement.

+he abo%e eligibility criteria would be in additions of the

companies prescribed under SI guidelines.


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Other acti%ities of the L0 include drafting and design of Offer documents,

Prospectus, statutory ad%ertisements and memorandum containing salient

features of the Prospectus. +he book running lead manager (#RL0s) shall

ensure compliance with stipulated re!uirements and completion of prescribed

formalities with the Stock &-changes, Ro and SI including finalisation of

Prospectus and Ro filing. ppointment of other intermediaries %i@.,

Registrar(s), Printers, d%ertising gency and #ankers to the Offer is also

included in the pre1issue processes.

+he lead manager also draws up the %arious marketing strategies for the issue.

+he post issue acti%ities including management of escrow accounts, coordinate

non1institutional allocation, intimation of allocation and dispatch of refunds to

bidders etc are performed by the L0. +he post Offer acti%ities for the Offer will

in%ol%e essential follow1up steps, which include the finali@ation of trading and

dealing of instruments and dispatch of certificates and demat of deli%ery of

shares, with the %arious agencies connected with the work such as the

Registrar(s) to the Offer and #ankers to the Offer and the bank handling refund

business. +he merchant banker shall be responsible for ensuring that these

agencies fulfill their functions and enable it to discharge this responsibility

through suitable agreements with the ompany.

Role o% registrar

+he Registrar finali@es the list of eligible allottees after deleting the

in%alid applications and ensures that the corporate action for crediting of shares

to the demat accounts of the applicants is done and the dispatch of refund ordersto those applicable are sent. +he Lead manager coordinates with the Registrar to


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ensure follow up so that that the flow of applications from collecting bank

branches, processing of the applications and other matters till the basis of

allotment is finali@ed, dispatch security certificates and refund orders completed

and securities listed.

Role o% ,an:er to t*e issue

#ankers to the issue, as the name suggests, carries out all the acti%ities of

ensuring that the funds are collected and transferred to the &scrow accounts.

+he Lead 0erchant #anker shall ensure that #ankers to the Issue are appointed

in all the mandatory collection centers as specified in "IP 'uidelines. +he lead

manager also ensures follow1up with bankers to the issue to get !uick estimates

of collection and ad%ising the issuer about closure of the issue, based on the

correct figures.

Mer*ant an:ing

Issue 0anagement Ser%ices G to act as #ook Running Lead

0anager7Lead

Project appraisal

orporate d%isory Ser%ices

underwriting of e!uity issues

#anker to the Issue7Paying #anker

Refund #anker

0onitoring gency

"ebenture +rustee

$n-estment an:ing


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lause


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.9 Bhere an issuer opts to obtain IPO grading under clause


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nalysis last si- year (9556195:8) no. of issue and issue amount

$ear 3o. of issues Issue amount (crore)

9556 9; :;,>86

95:5 >= :5,6;=

95:: >= 9?,


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95:8 :> :6>?


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$nterpretationJ

s shown in the table during the economic boom there were much more IPOs.

"uring 95:9195:; the share market witnessed its highest number of IPOs in

past one decade and highest issue amount. "ue to inflation and slowdown in

economic it affect the Indian IPO market in year 95:;, 95:8.

$ndia9s Largest $Ps in #0"

• "uring 95:8, there were 95 IPOs. Of which, := IPOs ha%e listed and 8

IPOs are yet to be listed.

• Of the := IPOs that ha%e listed, < IPOs ha%e recei%ed in%estment fromnchor In%estors and :: IPOs ha%e not recei%ed in%estment fromnchor In%estors.

2 $P Reei-ed $n-estment %rom An*or $n-estor


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ompan An*or

in-estor

$ssue SiIe

($NRM)

&urrent


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Interpretation

Of the < IPOs that ha%e recei%ed in%estment from nchor In%estors, ; IPOs are

trading below the issue price (that is =5H of such issues) and only 9 IPO is

trading abo%e the issue price. On an aggregate basis, about Rs. =58:> rores is

mobili@ed by such IPOs that ha%e recei%ed anchor in%estors. 2owe%er, the

current %alue of such IPOs is down to Rs. rores, indicating current 0ark1to10arket profit

of 9.6 H.

• $Ps *a-e not reei-ed in-estment %rom An*or $n-estors.


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Sr.No &ompan An*or

$n-estor

$ssue

SiIe

($NRM)

&urrent

-alue

&urrent

M/M

Return

()

Pro%it Loss

Edser-So%tsstemsLtd.

No #"0 C0 B0".#2 0

# Ma*indraHolida '

Resorts $ndia

Ltd.

No #730 B720 "#.B 0

B E+el$n%o?as

Ltd.

No "30 BB0 1B0.33 0

" RaF il Mills

Ltd

No 7"0 C30 1"0.#2 0

2 NHP& Ltd. No C07B32 2"7B20 10 0

C 8indal &ote+Ltd.

No 3"" 7"0 B2 0

Glo,usSpirits Ltd.

No 20 0 12.02 0

3 il $ndiaLtd.

No #7# B#7300 3.0 0

Euro

Multi-isionLtd.

No CC0 #0 123.B 0

0 /*in:so%tGlo,al

Ser-ies Ltd.

No "C0 700 B2.BC 0

AsteLi%esienes

Ltd.

No C#0 C"0 B.B2 0

/otal C7B C700 0.3 C 2


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Partiular $ssue siIe

(in Rs.

&rs)

&urrent

-alue (in

Rs. &rs)

Return

()

$P

in

Pro%it

$P

in

Loss

Aggregate o% $Ps ?it* partiipation o%

An*or $n-estors

C07" 2C7BB0 #. # B

Aggregate o% $Ps ?it*out

partiipation o% An*or $n-estors C7B C700 0.3 C 2

/otal 72C72"3 72B7#B0 B. 3 3

I!ter#rettio!

Outof the :: IPOs that ha%e not recei%ed in%estment from nchor in%estors,about = IPOs are trading abo%e the issue price and < IPOs are trading below theissue price. +he total amount that is mobili@ed by such IPOs that ha%e notrecei%ed in%estment from nchor in%estors is about Rs. 6,=:;: rores. nd, the

current %alue of such IPOs is increased to about Rs. 6,=655 rores, indicating a0ark1to10arket gain of about Rs. >=6 rores, indicating current 0ark1to0arket gain of V5.?:H.

On an aggregate basis, total amount that is mobili@ed by := IPOs is about Rs.:,


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&%en though the IPO market has tried to stage a comeback during 95:8, thelisting performances of se%eral high profile companies has been disappointing,raising the concerns about the reco%ery of the primary market. urther, e%en theIPOs which could able to attract the anchor in%estors interest, couldnt able to

fare well. In fact, the IPOs which ha%e recei%ed the in%estment from nchor In%estors ha%e underperformed in comparison to the IPOs which ha%e notrecei%ed the in%estment from nchor In%estors.

Sector *ise Com#riso! +,olume-


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(R&I) 2ealthcare and #SI sector didnCt ha%e any offering in 95:8, butcontributed more than 9


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Interpretation

Out of the total &nergy proceeds, 32P IPO contributed H

Out of the total Industrial proceeds, OIL India IPO contributed ?:H

Out of the total +0+ proceeds, "en 3etworks IPO contributed

>8H


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indings

'

&onlusion

MaFor indings


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n IPO can be a risky in%estment. or the indi%idual in%estor, it is

tough to predict what the stock or shares will do on its initial dayof trading and in the near future since there is often little historical

data with which to analy@e the company.

IPOCs are playing major role in the field of in%estment.

It can be obser%ed that out of := companies, only < companies

ha%e gi%en positi%e returns on the date of listing.

Out of := companies, :: IPOs ha%e not recei%ed in%estment from

nchor In%estors.

s per sectors wise comparison out of > areas only ; sector

(&nergy / power, Industrial, and +elecom, 0edia / +echnology)

gi%es better response.

s per sector wise comparison in year 95:; and 95:8 out of >

areas only ; sectors (&ducation, energy / power and +0+) gi%e positi%e return.

In IPO process Intermediary (SI, 3S&, #S&) play a %ital role in

issue of IPO book building.

&onlusion


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IPO is used by a company to raise its funds. +he e-tra amount obtained from public may be in%ested in the de%elopment o f the company, although it costs a

little to a company but it gi%es a way to get more money for long termin%estments.

+he issue of an IPO by a ompany in%ol%es a number of stages, eachcalling for a great deal of %erification. +he rele%ant and updated information onthe ompany has to be captured precisely in the Prospectus. +he decision by theIn%estors on whether to in%est in a ompany is influenced significantly by theinformation contained in the Prospectus. +he Regulatory #odies are alsoin%ol%ed and there are set procedures that must be followed. Legal compliance

has to be maintained. 0oreo%er, the ompanyCs potential should not beunderstated in or lost in the Prospectus because of the weight of such rules,regulations and formalities..

In this project all the aspects of IPO ha%e been studied like IPO norms, IPO

process and its regulatory aspect, Pricing Process, actors and financial

parameters to watch before in%esting in an IPO.

+hus the objecti%e of studying is achie%ed.

S!GGESTIONS


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+he in%estment in IPO can pro%e too risky because the in%estor does not

know anything about the company because it is listed first time in the

market so its performance cannot be measure.

On the other hand it can be said that the higher the risk higher the returns

earned. So we can say that the though risky if in%estment is done then itcan gi%e higher returns as well.

Primary market is more %olatile than the secondary market because all

the companies are listed for the first time in the market so nothing can besaid about its performance.

If higher risk is taken, it is always rewarded with the higher returns. So

higher the risk the more the returns rewarded for it.

ABe can fairly predict the future, but canCt make it happen as it is.E

$L$GRAPHY


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5e,sitesJ

www. bseindia.com

www.religareonline.in

www. business1standard.com

www.moneycontrol.com

www.nseindia.com

www.bseindia.com

httpD77www.thein%estor.t%7money7thebrokerageindustry.htm

httpD77www.economywatch.com7market7share1market7share1market

trading.html

#ooks / KournalsD

3S& fact book 95:8

Raising capital, second edition 95:5, A'&+ +2& 0O3&$ $O* 3&&"

+O 'ROB $O*R #*SI3&SS, *+2OR 3"R&B K . S2&R03 3S& ertification

#S& ertification

SI 'uidelines1 ugust 1 95:8

ANNEQ@RE

http://www.moneycontrol.com/http://www.nseindia.com/http://www.bseindia.com/http://www.theinvestor.tv/money/thebrokerageindustry.htmhttp://www.economywatch.com/market/share-market/share-market%20trading.htmlhttp://www.economywatch.com/market/share-market/share-market%20trading.htmlhttp://www.moneycontrol.com/http://www.nseindia.com/http://www.bseindia.com/http://www.theinvestor.tv/money/thebrokerageindustry.htmhttp://www.economywatch.com/market/share-market/share-market%20trading.htmlhttp://www.economywatch.com/market/share-market/share-market%20trading.html


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expansion plans in )ndia. 6he accuulated corpus would beutili;ed to !und its airline business and to payof debt !or itsac7uired li7uor copany =haw allace @ 4opany.

6he brand 'ing8sher is being owned by the business

congloerate (nited Breweries +roup. 6he brand is being used!or two business entities C $irlines and $lcoholic Beverage. 6he$irlines operates under the nae o! 'ing8sher $irlines andthe alcoholic beverage segent anu!actures Beer and%ineral ater under the sae brand nae. 6ill now thecopany has not launched any )PO to !und its aggressiveexpansion plans, but plans to launch it in near !uture to raisecapital. Dr EiAay %allya is the 4hairan and 4"O o! both thesegents. 6he 4hie! o! the (nited Breweries olding &td

>(B&?, %r EiAay %allaya, said that the group would coe upwith an )nitial Public Ofering in 01-2 and would raise a totalcorpus o! (=G 911 illion. 6he )nitial Public Ofering o! the'ing8sher $irlines would target a corpus o! (=G 011 illion andthe rest would be raised through the )PO o! the li7uor business.'ing8sher $irline )PO, to be issued !or the 8rst tie in the year01-2, to 8nance the airlineHs expansion and !unding o! $231sair Ieet.

The -aruti I+O has set a price range o! s. -0 per shareabove the Floor price o! s. --. 6he subscription !or %aruti )POopened on une -0, 0112 and closed on une -J, 0112. 6heresponse to %aruti )PO was overwheling within thesubscription period, which led to an over:subscription o! thepublic oferings o! %aruti by ore than ten ties.

6he governent decided to shell out 3 percent shares o! )POto the noninstitutional investors and - percent shares to the

non:institutional high networth individuals. 4onse7uently,governent would get s.JJ2 crores !or 5.J9 crores shares. But


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="B) recoended that


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I+O G.OSSARY

A

Alloation

+his is the amount of stock in an initial public offering (IPO) granted by theunderwriter to an in%estor.

A%termar:et

+rading in the IPO subse!uent to its offering is called the aftermarket.

A%termar:et rders

*nderwriters look fa%orably on in%estors who buy IPOs in the days after theIPO first goes public. Bhile underwriters cannot solicit aftermarket orders,some e-pect in%estors to purchase two or three times their IPO allocation in theaftermarket.

B

oard o% Diretors

+he composition of the #oard of "irectors is particularly critical for an IPO.+ypically, a board is composed of inside and outside directors.

ro:en $Ps


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If an IPO trades below its IPO price in the aftermarket, it is said to be a brokenIPO.

C

&alendar+his refers to upcoming IPOs and secondary offerings. #rokerage houses ha%ee!uity calendars, bond calendars and municipal calendars.

&learing Prie

+he price at which all shares of an IPO can be sold to in%estors in a "utchuction. Sometimes referred to as the Amarket clearing priceE.

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F

irst Da &lose

+he closing price at the end of the first day of trading reflects not only how wellthe lead manager priced and placed the deal, but what the near1term trading islikely to be.

loat

Bhen a company is publicly traded, a distinction is made between the totalnumber of shares outstanding and the number of shares in circulation, referredto as the float. +he float consists of the companys shares held by the general

public.

G

Green S*oe

typical underwriting agreement allows the underwriters to buy up to anadditional :


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Preliminar Prospetus

+his is the offering document printed by the company containing a descriptionof the business, discussion of strategy, presentation of historical financialstatements, e-planation of recent financial results, management and their

backgrounds and ownership.

Proeeds

ompanies go public to raise money. +he money raised is referred to as proceeds.

R

Red Herring

+his is the term of art for the preliminary prospectus. It gets its name from the printed red disclaimer on the left side of the prospectus.

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U-V

@nder?riter

+his is a brokerage firm that raises money for companies using public e!uityand debt markets. *nderwriters are financial intermediaries that buy stock or

bonds from an issuer and then sell these securities to the public.


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swathi ipo-special-reference-with-religare-securites.doc

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