2. • The market where investment funds like bonds, equities
and mortgages are traded.
• It is the market for securities, where companies and govt.
can raise long term funds.
• Instruments like equity, credit market,insurance,foreign
exchange, hybrid and derivative instruments.
Capital Market
4. • NIM or primary market or long term debt market
• Includes-
• IPO/Public Issue
• Right Issue
• Private Placement
• Offer for sale
New issue market
5. • The first sale of stock by a private company to the public. IPOs
are often issued by smaller, younger companies seeking the
capital to expand, but can also be done by large privately
owned companies looking to become publicly traded.
In an IPO, the issuer obtains the assistance of an underwriting
firm, which helps it determine what type of security to issue
(common or preferred), the best offering price and the time to
bring it to market.
Also referred to as a "public offering."
IPO
6. • It is an agreement whereby the underwriter promises to
subscribe to a specified number of shares or debentures or
a specified amount of stock in the event of public not
subscribing to the issue
Underwriting
7. • Standing behind the issue
• Outright purchase
• Consortium method
Methods of underwriting
8. • Institutional underwriters
• Non-Institutional underwriters
Underwriters in India may
be classified into two
categories-:
9. • LIC
• UTI
• IDBI
• ICICI
• Commercial Banks and General Insurance companies
Institutional
underwriters
10. • Through the intermediary
• Issue house or broker
• They purchase at negotiated price and resell at a higher
price
• The difference between the two prices is called turn or
spread
• Not common in India
Offer for sale
11. • Green shoe options typically allow underwriters to sell up
to 15% more shares than the original number set by the
issuer, if demand conditions warrant such action.
• In certain cases it can be more than 15 % also with prior
permission of SEBI
• Used in case of International IPO
Green Shoe option
12. • An offer document means prospectus in case of public
issue or offer for sale and letter for offer in case of right
issue, which is required to be filed with the Registrar of
Companies(ROC) and stock exchange.
Kinds of offer documents
13. • A company before making any public issue of securities,
shall file a draft prospectus with SEBI,through an eligible
merchant banker,atleast 21 days prior to the filing of
prospectus with ROC.
Draft Prospectus
14. • Before making any right issue for an amount exceeding
50lakh shall file this with SEBI at least 21 days prior of
filing
Draft letter of offer
15. • A prospectus is a disclosure document that describes a
financial security for potential buyers. A prospectus commonly
provides investors with material information about mutual
funds, stocks, bonds and other investments, such as a
description of the company's business, financial
statements, biographies of officers and directors, detailed
information about their compensation, any litigation that is
taking place, a list of material properties and any other material
information. In the context of an individual securities
offering, such as an initial public offering, a prospectus is
distributed by underwriters or brokerages to potential
investors.
Prospectus
16. • Abridged Prospectus' is a shorter version of the
Prospectus and contains all the salient features of a
Prospectus. It accompanies the application form of public
issues.
Abridged Prospectus" means the memorandum as
prescribed in Form 2A under subsection (3) of section 56
of the Companies Act, 1956. It contains all the salient
features of a prospectus. It accompanies the application
form of public issues.
Abridged Prospectus
17. • When securities is issued in stages
• Then a prospectus issued at initial stage
• And Information memorandum for subsequent stages
Shelf Prospectus
18. • There is no price or issue size stated in the red
herring, and it is sometimes updated several times before
being called the final prospectus. It is known as a red
herring because it contains a passage in red that states the
company is not attempting to sell its shares before the
registration is approved by the SEBI.
Red herring Prospectus
