Ipo and Book Building

7/29/2019 Ipo and Book Building

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Public Issueand

Book-Building


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Made By-

Gargi Pandey

Sanjana Pandya

Vishal Salve

Zibran Sayyed

Tanvi ShahMaitri Sheth

126127134136149154


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Introduction of IPOAn initial public offering is the first

sale of stock by a company to the

public. A company can raise money by

issuing either debt or equity. IPO is

when unlisted company makes a freshissue of securities or both for the first

time to the public. Thus, it paves the

way for listing and trading

of issuers securities.


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Advantages of IPOAccess to capital

Increased employee commitment

and recruiting power

Complements product marketing

Expands business relationships

Facilitates merger and acquisition

activity

Provides flexibility in financing


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RESPONSIBILITY

Sharing Corporate

Control and Financial Gain

Managing for

Shareholders Value

Sharing Strategic

Information


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Who gets money in IPO?The money paid by investors for an

IPO goes directly to the company.

However, in the offer for sale of shares

in the course of disinvestment, the

money goes to the government.

Once the permission to trade these

shares are granted to shareholders,

the profit or loss incurred on thetransactions accrues to the

shareholders. The future profits made

by a company are also distributed

among shareholders as dividend.


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Book-buildingBook building is essentially a process usedby companies raising capital through

public offerings- both (IPOs) or (FPOs)to

aid price & demand discovery. It is a

mechanism where , during the period for

which the book for the offer is open.

The bids are collected from investors at

various prices, which are within price-

band specified by the issuer. The process

is directed towards both the institutionalas well as the retail investors, the issue

price is determined after the bid closure

based on the demand generated in the

process.


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DEFINITION

SEBI Guidelines, 1995 defines

book building as a process

undertaken by which a demand

for the securities proposed to be

issued by a body corporate is

elicited and built up by and the

price for such securities isassessed for the determined of

the quantum of such securities

to be issued by means of notice,

circular, advertisement,document or information

memoranda or offer document.


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The process of Bookbuilding1. The issuer who is planning an offer nominates lead merchant

banker(s) as book runners.

2. The issuer specifies the no of securities to be issued and price

band for bids.

3. The issuer also appoints syndicate members with whom orders

are to be placed by the investors.4. The syndicate members input the orders into and electronic

book. This process id called bidding and is similar to open

auction.

5. The book normally remains open for a period of 5 days.

6. Bids have to be entered within the specified price band.7. Bids can be revised by the bidders before the book closes.

8. On the close of the book-building period, the book runners

evaluate the bids on the basis of demand at various price levels.

9. The book runners and the Issuer decide the final price at which

the securities shall be issued.


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Rules governing Book building

are covered in chapter XI of the

securities and exchange board

of India (Disclosure and investor

protection)Guidelines 2000.

Book building was recognized

by SEBI in India after having the

recommendations of the

committee under the

GUIDELINES


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Thus, we would like to conclude

by saying that IPO is when a

company issues common stock orshares to the public for the first

time. IPO has many advantages

too. Book building is a veryessential process in order to raise

capital of a company through

IPOs. It is a process which is nowpracticed and adopted worldwide.

Book building is also practiced at

BSE, NSE and other security

Documents

Ipo and Book Building