A PROJECT REPORT ON

IPO OF RBL BANK

SUBMITTED
TO THE UNIVERSITY OF MUMBAI
AS A PARTIAL REQUIREMENT FOR COMPLETING THE DEGREE
OF
M.COM (BANKING & FINANCE) PART 2
SUBJECT: FINANCIAL MARKETS
SUBMITTED BY:
HINA F SHAIKH
UNDER THE GUIDANCE OF
Prof. Santosh Gupta

VIDYALANKAR SCHOOL OF INFORMATION TECHNOLOGY

(AFFILIATED TO UNIVERSITY OF MUMBAI)

VIDYALANKAR MARG, WADALA (E)

MUMBAI 400037

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2
 DECLARATION

Vidyalankar School of Information Technology

(Affiliated to University of Mumbai)
Vidyalankar Marg, Wadala (E),
Mumbai 400 037

I HINA.F.SHAIKH, student of MCOM IN BANKING AND

FINANCE SemesterIII, Vidyalankar School of Information Technology,
hereby declare that I have completed the project on IPO OF RBL
BANK

The information submitted is true and original to the best of

my knowledge.

Signature of the Student

NAME OF THE STUDENT

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 ACKNOWLEDGEMENT

I hereby acknowledge all those who directly or indirectly helped me in

drafting of this project report. It would not have been possible for me to
complete the task without their help and guidance.

First of all I would like to thank the Principal Dr. Rohini Kelkar and the
coordinator Prof. Sandip khandekar who gave me the opportunity to do
this project work. They also conveyed the important instructions from
the university time to time. Secondly, I am very much obliged of Prof.
Santosh Gupta for giving guidance for completing the project.

Last but not the least; I am thankful to the University of Mumbai for
offering the project in the syllabus. I must mention my hearty gratitude
towards my family, other faculties and friends who supported me to go
ahead with the project.

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 INDEX
Sr.No Particulars Page No.
1 Executive summary 6

2 Objectives of the study 7

3 Research Methodology 8

4 Introduction 9

5 Eligibility Criteria 11

6 IPO Process 12

7 RBL BANK- Introduction 19

8 Objects of the issue 21

9 Conclusion 24

10 Bibliography 25

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 EXECUTIVE SUMMARY

The project is about the Initial Public Offering Of RBL Bank formerly known as
Ratnakar Bank Limited.
The project contains the IPO process, and the various other factors related to IPO
of RBL bank.

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 OBJECTIVE OF STUDY

1. To study about the Initial Public Offering

2. To study the IPO Process
3. To analyse the IPO of RBL Bank

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 RESEARCH METHODOLOGY

This project consist data which are collected from various sources. Normally there
are two sources of collecting the data i.e. primary data and secondary data.

In this project I have taken secondary data.

The secondary data about the project is collected through various sources i.e.

Books on the very topic.

Various Websites.
Newspaper Articles.

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 INTRODUCTION

Initial public offering (IPO) or stock market launch is a type of public

offering in which shares of a company usually are sold to institutional investors
that in turn, sell to the general public, on a securities exchange, for the first time.
Through this process, a privately held company transforms into a public company.
Initial public offerings are mostly used by companies to raise the expansion of
capital, possibly to monetize the investments of early private investors, and to
become publicly traded enterprises. A company selling shares is never required to
repay the capital to its public investors. After the IPO, when shares trade freely in
the open market, money passes between public investors. Although IPO offers
many advantages, there are also significant disadvantages, chief among these are
the costs associated with the process and the requirement to disclose certain
information that could prove helpful to competitors. The IPO process is
colloquially known as going public.

Details of the proposed offering are disclosed to potential purchasers in the form of
a lengthy document known as a prospectus. Most companies undertake an IPO
with the assistance of an investment banking firm acting in the capacity of
an underwriter. Underwriters provide several services, including help with
correctly assessing the value of shares (share price) and establishing a public
market for shares (initial sale). Alternative methods such as the dutch auction have
also been explored. In terms of size and public participation, the most notable
example of this method is the Google IPO. China has recently emerged as a major
IPO market, with several of the largest IPOs taking place in that country.

When a company lists its securities on a public exchange, the money paid by
the investing public for the newly issued shares goes directly to the company
(primary offering) as well as to any early private investors who opt to sell all
or a portion of their holdings (secondary offering) as part of the larger IPO.
An IPO, therefore, allows a company to tap into a wide pool of potential
investors to provide itself with capital for future growth, repayment of debt,

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 or working capital. A company selling common shares is never required to
repay the capital to its public investors. Those investors must endure the
unpredictable nature of the open market to price and trade their shares.

After the IPO, when shares trade freely in the open market, money passes
between public investors. For early private investors who choose to sell
shares as part of the IPO process, the IPO represents an opportunity
to monetize their investment. After the IPO, once shares trade in the open
market, investors holding large blocks of shares can either sell those shares
piecemeal in the open market, or sell a large block of shares directly to the
public, at a fixed price, through a secondary market offering. This type of
offering is not dilutive, since no new shares are being created.

Once a company is listed, it is able to issue additional common shares in a

number of different ways, one of which is the follow-on offering. This
method provides capital for various corporate purposes through the issuance
of equity without incurring any debt. This ability to quickly raise potentially
large amounts of capital from the marketplace is a key reason many
companies seek to go public.

ADVANTAGES OF IPO
Enlarging and diversifying equity base

Enabling cheaper access to capital

Increasing exposure, prestige, and public image

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 Attracting and retaining better management and employees through liquid
equity participation

Facilitating acquisitions (potentially in return for shares of stock)

Creating multiple financing opportunities: equity, convertible debt, cheaper

bank loans, etc.

DISADVANTAGES OF IPO

Significant legal, accounting and marketing costs, many of which are

ongoing

Requirement to disclose financial and business information

Meaningful time, effort and attention required of management

Risk that required funding will not be raised

Public dissemination of information which may be useful to competitors,

suppliers and customers.

Loss of control and stronger agency problems due to new shareholders

Increased risk of litigation, including private securities class actions and

shareholder derivative actions.

ELIGIBILITY CRITERIA OF ISSUING IPO

(1) An issuer may make an initial public offer, if:

(a) it has net tangible assets of at least three crore rupees in each of the preceding
three full years (of twelve months each), of which not more than fifty per cent. are

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held in monetary assets: Provided that if more than fifty per cent. of the net
tangible assets are held in monetary assets, the issuer has made firm commitments
to utilise such excess monetary assets in its business or project;

(b) it has a track record of distributable profits in terms of section 205 of the
Companies Act, 1956, for at least three out of the immediately preceding five
years: Provided that extraordinary items shall not be considered for calculating
distributable profits;

(c) it has a net worth of at least one crore rupees in each of the preceding three full
years (of twelve months each);

(d) the aggregate of the proposed issue and all previous issues made in the same
financial year in terms of issue size does not exceed five times its pre-issue net
worth as per the audited balance sheet of the preceding financial year;

(e) if it has changed its name within the last one year, at least fifty per cent. of the
revenue for the preceding one full year has been earned by it from the activity
indicated by the new name.

IPO PROCESS

When a company is aiming to go public, at first it hires an investment bank

to do the underwriting, the way of raising money through equity or debt,
functions associated with the issue. Although, a company itself also may sell
its shares but, usually an investment bank is selected for that purpose.
Underwriters act as intercessors between the public, who are investing, and
the companies.

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 The investment bank and the company will first initiate the process of deal
negotiation. The main discussing issues are the money amount that the
company is going to raise, security type to be issued and all the other details
involved with the underwriting agreement.

Once the deal gets finalized, the investment bank sets a registration
statement up which will be submitted to the Securities and Exchange
Commission. That registration statement consists of information regarding
the offering and also other company informations like, background of the
management, financial statements, legal issues etc.

Then the Securities and Exchange Commission (SEC) needs a cooling off
period during which it will examine all the submitted documents and make
sure that all information regarding the deal have been given to them. After
getting the SEC's approval, a date is going to be fixed on which the company
will offer the stock to the public.

During the above mentioned cooling off period the underwriter publishes an
initial prospectus that contains all the necessary information regarding the
company. The effective date of issuing the stock as well as the price have not
been mentioned in the prospectus, for these are not known at this time.

Then the company and the underwriter meets to decide the price of the
stock. This decision depends highly on the current market condition.

Lastly, the stocks are sold in the market and money is raised from the
investors.

TYPES OF ISSUES

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 Fixed Price Issue

Public Issue

Private Placement

Offer for Sale

Book Building Issue

Fixed Price:- Wherein the price band of the issue is fixed. For e.g
Dwarikesh Sugar Industries Limited Public Issue of 50,00,000 equity shares
of Rs 10/- each at a premium of Rs 55/- per share aggregating Rs 3250 lacs.

Book Building Issue:

-- Book Building is a price discovery mechanism which is undertaken to

ascertain and determine the price of the security proposed to be issued by a body
corporate.

-- There is a price band which gives the bidder the facility to bid within a price
band at different price levels.

-- e.g National Thermal Power Corporation Limited wherein the price band was
fixed between Rs 52 to Rs 62/-

PRICE DISCOVERY THROUGH BOOK BUILDING

Book building is a systematic process of generating, capturing, and recording
investor demand for shares during an initial public offering (IPO), or other
securities during their issuance process, in order to support efficient price
discovery.

Book building is usually a process used in IPO which helps to determine

price and demand discovery.

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 It is a process used for marketing a public offer of equity shares of a
company. It is a process where, during the period for which the book for IPO
is open, bids are collected from investors at various prices, which are above
or equal to floor price.

The offer/issue price is then determined after the last date of IPO based on
certain evaluation criteria.

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CATEGORY OF BIDDERS
Retail Individual Investor:- means an investor who applies or bids for
securities of or for face value of not more than Rs 50,000/-

Non-Qualified Institutional Buyer: Any investor who bids for an amount

above Rs 50,000 and does not fall in the QIB category e.g HNI investors.

Qualified Institutional Buyer(QIB) shall mean:

a. public financial institution as defined in section 4A of the

Companies Act, 1956;

b. scheduled commercial banks;

c. mutual funds;

d. foreign institutional investor registered with SEBI;

e. multilateral and bilateral development financial institutions;

f. venture capital funds registered with SEBI.

g. foreign Venture capital investors registered with SEBI.

h. state Industrial Development Corporations.

i. insurance Companies registered with the Insurance Regulatory and

Development Authority

j. provident Funds with minimum corpus of Rs. 25 crores

k. pension Funds with minimum corpus of Rs. 25 crores

APPOINTMENT OF UNDERWRITERS
The underwriters are appointed who commit to shoulder the liability and subscribe
to the shortfall in case the issue is under-subscribed. For this commitment they are
entitled to a maximum commission of 2.5% on the amount underwritten.

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APPOINTMENT OF REGISTRAR
Registrars process the application forms, tabulate the amounts collected during the
issue and initiate the allotment procedures.

APPOINTMENT OF BROKERS TO THE ISSUE

Recognized members of the Stock Exchanges are appointed as brokers to the issue
for marketing the issue. They are eligible for a maximum brokerage of 1.5%.

APPOINTMENT OF LAWYERS
Lawyers are appointed by company to ensure that all the agreements they enter are
as per the rules and regulations.

DRAFT PROSPECTUS
A draft prospectus is prepared giving out details of the company, promoters,
background, management, terms of the issue, project details, modes of
financing, past financial performance, projected profitability and others.

The lead manager has to verify and certify the facts stated in the draft
prospectus and ensure that the company is not making any false claims.
Which is to be filed with SEBI (Securities and Exchange Board of India) 21
days before IPO, SEBI gives its observation and recommends necessary
changes.

RED HERRING

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 The underwriter puts together what is known as the RED HERRING.

This is an initial prospectus containing all the information about the

company except for the offer price and the effective date, which aren't
known at that time.

With the red herring in hand, the underwriter and company attempt to hype
and build up interest for the issue. They go on a road show - also known as
the "dog and pony show" - where the big institutional investors are courted.

FILING OF PROSPECTUS WITH REGISTRAR OF COMPANIES

The prospectus along with the copies of the agreements entered into with the
Lead Manager, Underwriters, Bankers, Registrars and Brokers to the issue is
filed with the Registrar of the Companies of the state where the registered
office of the company is located.

PRINTING AND DISPATCH OF APPLICATION FORMS

The prospectus and application forms are printed and dispatched to all the
merchant bankers, underwriters, brokers to the issue.

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 RBL BANK
RBL Bank Limited (formerly known as The Ratnakar Bank limited) is a
scheduled commercial bank headquartered in the Kolhapur region of Maharashtra.
Founded in August 1943, RBL is one of the oldest private sector banks in India.
The Bank currently services approximately 19,00,000 customers and has a total
business size of over Rs. 45,000 Crores.

It offers a range of banking products and services categorized largely in 5 verticals

- Corporate & Institutional Banking, Commercial Banking, Retail Banking, Agri &
Development Banking and Financial Markets. As of July 2015, ICRA has
reaffirmed the rating of [ICRA] A1+ to the Rs 2,250 Crore (Enhanced from Rs.
1,500 Crore) Certificates of Deposits Programme of RBL Bank. It has also
reaffirmed the rating of [ICRA]MAA- with stable outlook on the Fixed Deposit
Programme and the rating of [ICRA] A1+ to the Short Term Fixed Deposits
Programme of the bank.

RBL Bank (formerly Ratnakar Bank Limited) is all set to hit the primary market
with its initial public offering (IPO) Issue Size Rs 1212.97 Crores opens on Aug
19, 2016 And closes on Aug 23, 2016, price band has been fixed between Rs. 224
and Rs. 225 per equity share.

Company Promoters:

RBL is a professionally managed company and does not have an identifiable

promoter in terms of the SEBI Regulations and the Companies Act, 2013.
Consequently, it has no 'promoter group' nor any 'group companies' in terms of the
SEBI Regulations.

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Company Financials:
Summary of financial Information

Particulars For the year/period ended (in Rs. Million)

31-Mar-16 31-Mar-15 31-Mar-14 31-Mar-13 31-Mar-

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Total Assets 391,600.91 271,036.49 181,970.77 129,622.74 72,072.67

Total Revenue 32,348.50 23,564.94 16,125.88 10,057.61 5,322.16

Profit After Tax 2,968.02 2,084.51 928.88 925.28 657.43

(PAT)

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 Objectives of the Study

The public issue comprises a fresh Issue and an offer for sale by the selling
shareholders. Information in thisection is taken from chittorgarh.com, India's No 1
IPO Investment Portal.

1. The Offer for Sale

RBL Bank will not receive any proceeds from the Offer for Sale.

2. The Fresh Issue

The proceeds from the fresh issue will be utilised towards the following objects:

A. Augment capital base to meet Bank's future capital requirements

B. Enhance their visibility and brand name among existing and
potential customers.;
C. General corporate purposes.

Issue Subscription Detail / Current Bidding Status

Number of Times Issue is Subscribed (BSE + NSE)

As on Date & Time QIB NII RII Total

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 Shares Offered / Reserved 10,864,515 8,111,221 18,926,183 37,901,919

Day 1 - Aug 19, 2016 17:00 IST 0.6700 0.2000 0.8600 0.6600

Day 2 - Aug 22, 2016 17:00 IST 4.2800 1.0800 3.2600 3.0800

Day 3 - Aug 23, 2016 18:18 IST 85.0800 198.0600 5.7000 69.6200

INTERNAL RISK FACTORS OF RBL BANK

1. Bank has, in certain instances in the past, allotted equity shares that were not
in compliance with the then-applicable laws relating to a public offering of
securities, which may subject our Bank to, among other things, further
regulatory consequences
2. recent growth may not be indicative of our future performance and we may
not be able to continue or improve our recent performance levels.
3. business and financial performance could suffer if we are unable to
effectively manage our growing asset portfolio and control the level of our
NPAs. Any increase in RBI-mandated provisioning requirements could also
affect our business.
4. We are involved in certain legal and other proceedings in India and may face
certain liabilities as a result of the same.

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5. We have significant contingent liabilities and any crystallization of our
contingent liabilities could materially and adversely affect our business,
financial condition, cash flows, results of operations and prospects.
6. If our existing customers and targeted customer segments are not receptive to
our new brand and new identity, our business and results of operations could
be adversely affected.
7. We are subject to liquidity risk due to asset-liability mismatches. If we fail to
maintain the growth in our customer deposits or if there is a significant
decrease in customer deposits, our Banks liquidity and business operations
could be materially and adversely affected.

EXTERNAL RISK FACTORS OF RBL BANK

1. We operate in a highly regulated industry and any changes in the regulations
or enforcement initiatives may adversely affect our business and the price of
our Equity Shares.
2. If ownership restrictions on private sector banks are relaxed, a single
investor may acquire a controlling stake in our Bank.
3. The implementation of the RBI Basel III Capital Regulations may adversely
affect us and the position of the equity shareholders.
4. We are required to maintain a cash reserve ratio (CRR) and a statutory
liquidity ratio (SLR) and any increase in these requirements could
materially and adversely affect our business, financial condition, cash flows
and results of operations.
5. We are exposed to fluctuations in foreign exchange rates and global interest
rates
6. Conditions in the Indian securities market may affect the price or liquidity of
the Equity Shares.
7. Companies operating in India are subject to a variety of central and state
government taxes and surcharge.

CONCLUSION
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Required changes in current IPO process

Bidding process to be made more convenient to retail.

Increasing the retail investor quota to 30 to 35% to promote retail

participation in IPOs.

To increase the ceiling of investment for retail category from Rs 50,000 to

Rs 1,00,000.

Refund Process: currently sent in physical form; to be converted in ECS

Registrars to be more proactive in solving IPO related queries.

More Transparency in terms of QIBs Bidding.

BIBLIOGRAPHY
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http://www.sebi.gov.in/cms/sebi_data/attachdocs/1470983171319.pdf

http://www.chittorgarh.com/ipo/rbl_bank_ipo/564/

https://en.wikipedia.org/wiki/Initial_public_offering

https://en.wikipedia.org/wiki/RBL_Bank

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