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EXECUTIVE SUMMARY

As we all know IPO INITIAL PUBLIC OFFERING is the hottest topic in the current industry, mainly because of India being a developing country and lot of growth in various sectors which leads a country to ultimate success. And when we talk about countrys growth which is dependent on the kind of work and how much importance to which sector is given. And when we say or talk about industries growth which leads the economy of country has to be balanced and given proper finance so as to reach the levels to fulfill the needs of the society. And industries which have massive outflow of work and a big portfolio then its very difficult for any company to work with limited finance and this is where IPO plays an important role. This report talks about how IPO helps in raising fund for the companies going public, what are its pros and cons, and also it gives us detailed idea why companies go public. How and what are the steps taken by the companies before going for any IPO and also the role of (SEBI) Securities and Exchange Board of India the BSE and NSE , what are primary and secondary markets and also the important terms related to IPO. It gives us idea of how IPO is driven in the market and what are various factors taken into consideration before going for an IPO. And 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 given a new vision in past and it is still continuing its work and also for many coming years.

INTRODUCTION
IPO stands for Initial Public Offering and means the new offer of shares from a company which was previously unlisted. This is done by offering those shares to the public, which were held by the promoters or the private investors prior to the IPO. In the case when other investors or Promoter held the shares the stake holding comes down to the extent their shares are offered to the public. In other cases new shares are issued to the public and the shares, which are with the promoters stay with them. In both cases the share of the promoters in the total capital comes down. For example say there are 100 shares in a company and 50 of these are offered to the public in an IPO then in such a case the promoters stake in the company comes down from 100% to 50%. In another case the company issues 50 additional shares to the public and the stake of the promoter comes down from 100% to 67%. Normally in an IPO the shares are issued at a discount to what is considered their intrinsic value and thats why investors keenly await IPOs and make money on most of them. IPO are generally priced at a discount, which means that if the intrinsic value of a share is perceived to be Rs.100 the shares will be offered at a price, which is lesser than Rs.100 say Rs.80 during the IPO. When the stock actually lists in the market it will list closer to Rs.100. The difference between the two prices is known as Listing Gains, which an investor makes when investing in IPO and making money at the listing of the IPO. A Bullish Market gives IPO investors a clear opportunity to achieve long term targets in a short term phase.

What is an IPO
An IPO is the first sale of stock by a company to the public. A company can raise money by issuing either debt or equity. If the company has never issued equity to the public, it's known as an IPO. Companies fall into two broad categories: private and public. A privately held company has fewer shareholders and its owners don't have to disclose much information about the company. Anybody can go out and incorporate a company: just put in some money, file the right legal documents and follow the reporting rules of your jurisdiction. Most small businesses are privately held. But large companies can be private too. Did you know that IKEA, Domino's Pizza and Hallmark Cards are all privately held? It usually isn't possible to buy shares in a private company. You can approach the owners about investing, but they're not obligated to sell you anything. Public companies, on the other hand, have sold at least a portion of themselves to the public and trade on a stock exchange. This is why doing an IPO is also referred to as "going public." Public companies have thousands of shareholders and are subject to strict rules and regulations. They must have a board of directors and they must report financial information every quarter. In the United States, public companies report to the Securities and Exchange Commission (SEC). In other countries, public companies are overseen by governing bodies similar to the SEC. From an investor's standpoint, the most exciting thing about a public company is that the stock is traded in the open market, like any other commodity. If you have the cash, you can invest. The CEO could hate your guts, but there's nothing he or she could do to stop you from buying stock. The first sale of stock by a private company to the public, IPOs are often issued by smaller, younger companies seeking 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), best offering price and time to bring it to market. IPOs can be a risky investment. For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company.

Primary and Secondary Markets


In the primary market securities are issued to the public and the proceeds go to the issuing company. Secondary market is term used for stock exchanges, where stocks are bought and sold after they are issued to the public.

PRIMARY MARKET
The first time that a companys shares are issued to the public, it is by a process called the initial public offering (IPO). In an IPO the company offloads a certain percentage of its total shares to the public at a certain price. Most IPOS these days do not have a fixed offer price. Instead they follow a method called BOOK BUILDIN PROCESS, where the offer price is placed in a band or a range with the highest and the lowest value (refer to the newspaper clipping on the page). The public can bid for the shares at any price in the band specified. Once the bids come in, the company evaluates all the bids and decides on an offer price in that range. After the offer price is fixed, the company allots its shares to the people who had applied for its shares or returns them their money.

SECONDRY MARKET
Once the offer price is fixed and the shares are issued to the people, stock exchanges facilitate the trading of shares for the general public. Once a stock is listed on an exchange, people can start trading in its shares. In a stock exchange the existing shareholders sell their shares to anyone who is willing to buy them at a price agreeable to both parties. Individuals cannot buy or sell shares in a stock exchange directly; they have to execute their transaction through authorized members of the stock exchange who are also called STOCK BROKERS.

Why Go Public?
Basically, going public (or participating in an "initial public offering" or IPO) is the process in which a business owned by one or several individuals is converted into a business owned by many. It involves the offering of part ownership of the company to the public through the sale of debt or more commonly, equity securities (stock).Going public raises cash and usually a lot of it. Being publicly traded also opens many financial doors: Because of the increased scrutiny, public companies can usually get better rates when they issue debt. As long as there is market demand, a public company can always issue more stock. Thus, mergers and acquisitions are easier to do because stock can be issued as part of the deal. Trading in the open markets means liquidity. This makes it possible to implement things like employee stock ownership plans, which help to attract top talent. Being on a major stock exchange carries a considerable amount of prestige. In the past, only private companies with strong fundamentals could qualify for an IPO and it wasn't easy to get listed. The internet boom changed all this. Firms no longer needed strong financials and a solid history to go public. Instead, IPOs were done by smaller startups seeking to expand their businesses. There's nothing wrong with wanting to expand, but most of these firms had never made a profit and didn't plan on being profitable any time soon. Founded on venture capital funding, they spent like Texans trying to generate enough excitement to make it to the market before burning through all their cash. In cases like this, companies might be suspected of doing an IPO just to make the founders rich. This is known as an exit strategy, implying that there's no desire to stick around and create value for shareholders. The IPO then becomes the end of the road rather than the beginning. How can this happen? Remember: an IPO is just selling stock. It's all about the sales job. If you can convince people to buy stock in your company, you can raise a lot of money.

Getting In On an IPO
THE UNDERWRITING PROCESS
Getting a piece of a hot IPO is very difficult, if not impossible. To understand why, we need to know how an IPO is done, a process known as underwriting. When a company wants to go public, the first thing it does is hire an investment bank. A company could theoretically sell its shares on its own, but realistically, an investment bank is required - it's just the way Wall Street works. Underwriting is the process of raising money by either debt or equity (in this case we are referring to equity). You can think of underwriters as middlemen between companies and the investing public. The biggest underwriters are Goldman Sachs, Merrill Lynch, Credit Suisse First Boston, Lehman Brothers and Morgan Stanley. The company and the investment bank will first meet to negotiate the deal. Items usually discussed include the amount of money a company will raise, the type of securities to be issued and all the details in the underwriting agreement. The deal can be structured in a variety of ways. For example, in a firm commitment, the underwriter guarantees that a certain amount will be raised by buying the entire offer and then reselling to the public. In a best efforts agreement, however, the underwriter sells securities for the company but doesn't guarantee the amount raised. Also, investment banks are hesitant to shoulder all the risk of an offering. Instead, they form a syndicate of underwriters. One underwriter leads the syndicate and the others sell a part of the issue. Once all sides agree to a deal, the investment bank puts together a registration statement to be filed with the SEC. This document contains information about the offering as well as company info such as financial statements, management background, any legal problems, where the money is to be used and insider holdings. The SEC then requires a cooling off period, in which they investigate and make sure all material information has been disclosed. Once the SEC approves the offering, a date (the effective date) is set when the stock will be offered to the public. During the cooling off period 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. As the effective date approaches, the underwriter and company sit down and decide on the price. This isn't an easy decision: it depends on the company, the success of the road show and, most importantly, current market conditions. Of course, it's in both parties' interest to get as much as possible. Finally, the securities are sold on the stock market and the money is collected from investors. As you can see, the road to an IPO is a long and complicated one. You may have noticed that individual investors aren't involved until the very end. This is because small investors aren't the target market. They don't have the cash and, therefore, hold little interest for the underwriters. If underwriters think an IPO will be successful, they'll usually pad the pockets of their favorite institutional client with shares at the IPO price. The only way for you to get shares (known as an IPO allocation) is to have an account with one of the investment banks that is part of the underwriting syndicate. But don't expect to open an account with $1,000 and be showered with an allocation. You need to be a frequently trading client with a large account to get in on a hot IPO. Bottom line, your chances of getting early shares in an IPO are slim to none unless you're on the inside. If you do get shares, it's probably because nobody else wants them. Granted, there are exceptions to every rule and it would be incorrect for us to say that it's impossible. Just keep in mind that the probability isnt high if you are a small investor.

IPO ADVANTAGES AND DISADVANTAGES


The decision to take a company public in the form of an initial public offering (IPO) should not be considered lightly. There are several advantages and disadvantages to being a public company, which should thoroughly be considered. This memorandum will discuss the advantages and disadvantages of conducting an IPO and will briefly discuss the steps to be taken to register an offering for sale to the public. The purpose of this memorandum is to provide a thumbnail sketch of the process. The reader should understand that the process is very time consuming and complicated and companies should undertake this process only after serious consideration of the advantages and disadvantages and discussions with qualified advisors.

ADVANTAGES OF GOING PUBLIC


Increased Capital A public offering will allow a company to raise capital to use for various corporate purposes such as working capital, acquisitions, research and development, marketing, and expanding plant and equipment. Liquidity Once shares of a company are traded on a public exchange, those shares have a market value and can be resold. This allows a company to attract and retain employees by offering stock incentive packages to those employees. Moreover, it also provides investors in the company the option to trade their shares thus enhancing investor confidence. Increased Prestige Public companies often are better known and more visible than private companies, this enables them to obtain a larger market for their goods or services. Public companies are able to have access to larger pools of capital as well as different types of capital. Valuation Public trading of a company's shares sets a value for the company that is set by the public market and not through more subjective standards set by a private valuator. This is helpful for a company that is looking for a merger or acquisition. It also allows the shareholders to know the value of the shares.

Increased wealth The founders of the company often have the sense of increased wealth as a result of the IPO. Prior to the IPO these shares were illiquid and had a more subjective price. These shares now have an ascertainable price and after any lockup period these shares may be sold to the public, subject to limitations of federal and state securities laws.

DISADVANTAGES OF GOING PUBLIC


Time and Expense Conducting an IPO is time consuming and expensive. A successful IPO can take up to a year or more to complete and a company can expect to spend several hundreds of thousands of dollars on attorneys, accountants, and printers. In addition, the underwriter's fees can range from 3% to 10% of the value of the offering. Due to the time and expense of preparation of the IPO, many companies simply cannot afford the time or spare the expense of preparing the IPO. Disclosure The SEC disclosure rules are very extensive. Once a company is a reporting company it must provide information regarding compensation of senior management, transactions with parties related to the company, conflicts of interest, competitive positions, how the company intends to develop future products, material contracts, and lawsuits. In addition, once the offering statement is effective, a company will be required to make financial disclosures required by the Securities and Exchange Act of 1934. The 1934 Act requires public companies to file quarterly statements containing unaudited financial statements and audited financial statements annually. These statements must also contain updated information regarding nonfinancial matters similar to information provided in the initial registration statement. This usually entails retaining lawyers and auditors to prepare these quarterly and annual statements. In addition, a company must report certain material events as they arise. This information is available to investors, employees, and competitors. Decisions based upon Stock Price Management's decisions may be effected by the market price of the shares and the feeling that they must get market recognition for the company's stock.

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Regulatory Review The Company will be open to review by the SEC to ensure that the company is making the appropriate filings with all relevant disclosures. Falling Stock Price If the shares of the company's stock fall, the company may lose market confidence, decreased valuation of the company may affect lines of credits, secondary offering pricing, the company's ability to maintain employees, and the personal wealth of insiders and investors. Vulnerability If a large portion of the company's shares are sold to the public, the company may become a target for a takeover, causing insiders to lose control. A takeover bid may be the result of shareholders being upset with management or corporate raiders looking for an opportunity. Defending a hostile bid can be both expensive and time consuming. Once a company has weighed the advantages and disadvantages of being a public company, if it decides that it would like to conduct an IPO it will have to retain a lead.

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Parameters to judge an IPO


Good investing principles demand that you study the minutes of details prior to investing in an IPO. Here are some parameters you should evaluate: Promoters Is the company a family run business or is it professionally owned? Even with a family run business what are the credibility and professional qualifications of those managing the company? Do the top level managers have enough experience (of at least 5 years) in the specific type of business? Industry Outlook The products or services of the company should have a good demand and scope for profit. Business Plans Check the progress made in terms of land acquisition, clearances from various departments, purchase of machinery, letter of credits etc. A higher initial investment from the promoters will lead to a higher faith in the organization. Financials Why does the company require the money? Is the company floating more equity than required? What is the debt component? Keep a track on the profits, growth and margins of the previous years. A steady growth rate is the quality of a fundamentally sound company. Check the assumptions the promoters are making and whether these assumptions or expectations sound feasible. Risk Factors The offer documents will list our specific risk factors such as the companys liabilities, court cases or other litigations. Examine how these factors will affect the operations of the company. Key Names Every IPO will have lead managers and merchant bankers. You can figure out the track record of the merchant banker through the SEBI website.

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Pricing Compare the companys PER with that of similar companies. With this you can find out the P/E Growth ratio and examine whether its earnings projections seem viable. Listing You should have access to the brokers of the stock exchanges where the company will be listing itself.

UNDERSTANDING THE ROLE OF INTERMEDIARIES


Who are the intermediaries in an issue? Merchant Bankers to the issue or Book Running Lead Managers (BRLM), syndicate members, Registrars to the issue, Bankers to the issue, Auditors of the company, Underwriters to the issue, Solicitors, etc. are the intermediaries to an issue. The issuer discloses the addresses, telephone/fax numbers and email addresses of these intermediaries. In addition to this, the issuer also discloses the details of the compliance officer appointed by the company for the purpose of the issue. Who is eligible to be a BRLM? A Merchant banker possessing a valid SEBI registration in accordance with the SEBI (Merchant Bankers) Regulations, 1992 is eligible to act as Book Running Lead Manager to an issue. What is the role of a Lead Manager? (pre and post issue) In the pre-issue process, the Lead Manager (LM) takes up the due diligence of companys operations/ management/ business plans/ legal etc. Other activities of the LM include drafting and design of Offer documents, Prospectus, statutory advertisements and memorandum containing salient features of the Prospectus. The BRLMs shall ensure compliance with stipulated requirements and completion of prescribed formalities with the Stock Exchanges, RoC and SEBI including finalization of Prospectus and RoC filing. Appointment of other intermediaries viz., Registrar(s), Printers, Advertising Agency and Bankers to the Offer is also included in the pre-issue processes. The LM also draws up the various marketing strategies for the issue.

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The post issue activities including management of escrow accounts, co-ordinate non-institutional allocation, intimation of allocation and dispatch of refunds to bidders etc are performed by the LM. The post Offer activities for the Offer will involve essential follow up steps, which include the finalization of trading and dealing of instruments and dispatch of certificates and demat of delivery of shares, with the various agencies connected with the work such as the Registrar(s) to the Offer and Bankers to the Offer and the bank handling refund business. The 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 Company. What is the role of a registrar? The Registrar finalizes the list of eligible allottees after deleting the invalid 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 orders to those applicable are sent. The Lead manager co-ordinates with the Registrar to 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 finalized, dispatch security certificates and refund orders completed and securities listed. What is the role of bankers to the issue? Bankers to the issue, as the name suggests, carries out all the activities of ensuring that the funds are collected and transferred to the Escrow accounts. The Lead Merchant Banker shall ensure that Bankers to the Issue are appointed in all the mandatory collection centers as specified in DIP Guidelines. Question on Due diligence The Lead Managers state that they have examined various documents including those relating to litigation like commercial disputes, patent disputes, disputes with collaborators etc. and other materials in connection with the finalization of the offer document pertaining to the said issue; and on the basis of such examination and the discussions with the Company, its Directors and other officers, other agencies, independent verification of the statements concerning the objects of the issue, price justification, etc., they state that they have ensured that they are in compliance with SEBI, the Government and any other competent authority in this behalf.

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IPO Process
Initial public offer or IPO is a way for a company to raise capital through public and get listed in the stock market to become a publicly traded company for first time. For a company, the cost of borrowing money through IPO is less in comparison to other popular options available in the market. Through IPO, company diversifies its equity base to large number of investors. When securities of a company is listed in stock exchanges, it also gets benefited in term of brand building as its being discussed on almost day to day basis among millions of investors and experts. Companies follow a complex process to raise money through IPO in India. The process begins with hiring investment bank(s) as the Lead Manager to sell the equity shares. The Lead Managers prepares a Draft Red Herring Prospectus (DRHP) and submit it to SEBI, the regulator for the securities market in India, for approval (this process is called IPO Filing). Company also hires an authorized Credit Rating Agency to grade the fundamentals of the company going public (as IPO Grading is mandatory) and gets am in-principal approval from Stock Exchanges (BSE, NSE) for listing of its equity shares. After receiving SEBI clearance on the public issue and approval from stock exchanges, company begins distribution of IPO Application Forms through its designated Syndicate Managers. The initial public issue is open for a certain number of days and the bids are updated with the stock exchanges as they are received. Once the IPO is closed for public subscription, in case of the Book Building IPO, the company with help from the Lead Managers and the IPO Registrar, decides the Issue Price of IPO Share (based on the demand). Then the Registrar does the fair distribution of shares and publishes a report in the form of Basis of Allotment document. The allocated shares are now deposited in to the demat accounts of the investors and get listed in designated stock exchanges on the specified IPO Listing Date. An India Stock Market investor can follow the complete IPO Cycle on the website. IPO tools available on this website allows investors to analyze Forthcoming IPO's, find IPO Research, discuss stocks with likeminded investors, analyze IPO Historic

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Data and follow the IPO Market though IPO Notes which are delivered regularly via Email Newsletters, SMS Alerts and Face book Updates

WHAT IS THE REGISTRATION PROCESS?


Going public requires a Registration Statement which is a carefully crafted document that is prepared by your attorneys and accountants. It requires detailed discussions on information pertaining to: Business product/service/markets Company Information Risk Factors Proceeds Use (How are you going to use the money) Officers and Directors Related party transactions Identification of your principal shareholders Audited financials After your registration statement is prepared, it is submitted to the Securities and Exchange Commission and various other regulatory bodies for their detailed review. When this process is completed, you and your management team will do a "road show" to present your company to the stock brokers who will then sell your stock to the public investors. Assuming they can successfully sell your issue, youll receive your money. Then it's simple, all you have to do is make a lot more money with the proceeds so as to increase the value of your, your teams and the public investors stock. Part 4.2

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UPCOMING IPO IN THE MARKET


Upcoming Initial Public Offering (IPOs) in India at a glance: Initial Public Offer (IPO) in India, means the first sale by a private company of its shares to the public. Initial Public Offers (IPOs) in India, are usually issued by small companies but at the same time big private companies also go public by issuing their shares. The Upcoming IPOs in India are being issued by those private companies that want to sell their shares in the country's capital markets. Many companies are planning to launch their IPOs in the financial year 2012

SUMMARY OF IPO MARKET ACTIVITIES:


Issuer company MCX Open Close Issue price Issue Type Issue Size(cr) IPO Grading

BCB Finance Ltd IPO Olympic Mar 09, Mar 13, Cards Ltd 2012 2012 IPO BB: Book Building Process FP: Fixed Price

Feb 22, Feb 24, 2012 2012 1,032.00 Feb 23, Feb 27, 2012 2012 25.00

BB FP

663.31 8.85

BB

25.00

IPO GRADING
IPO Grading is provided by SEBI approved rating agencies including CRISIL, CARE and ICRA. IPO Grading is designed to provide investors an independent, reliable and consistent assessment of the fundamentals of IPO Issuer Companies. As IPO Grading is decided much earlier than the issue price or issue dates are finalize (usually on the IPO filing) and they just tell about the fundamentals of the company. IPO grading is the grade assigned by a Credit Rating Agency (CRAs)

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registered with SEBI, to the initial public offering (IPO) of equity shares or any other security which may be converted into or exchanged with equity shares at a later date. The grade represents a relative assessment of the fundamentals of that issue in relation to the other listed equity securities in India. Such grading is generally assigned on a fivepoint point scale with a higher score indicating stronger fundamentals and vice versa as below. IPO grade 1 Poor fundamentals IPO grade 2 BelowAverage fundamentals IPO grade 3 Average fundamentals IPO grade 4 Aboveaverage fundamentals IPO grade 5 Strong fundamentals

WHAT IS BOOK BUILDING?


SEBI guidelines 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 and the price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice, circular, advertisement, document or information memoranda or offer document". Book Building is basically a process used in Initial Public Offer (IPO) for efficient price discovery. It is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date. As per SEBI guidelines, an issuer company can issue securities to the public though prospectus in the following manner:

100% of the net offer to the public through book building process 75% of the net offer to the public through book building process and 25% at the price determined through book building. The Fixed Price portion is conducted like a normal public issue after the Book Built portion, during which the issue price is determined.

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DIFFERENCE BETWEEN BOOK BUILDING ISSUE AND FIXED PRICE ISSUE


In Book Building securities are offered at prices above or equal to the floor prices, whereas securities are offered at a fixed price in case of a public issue. In case of Book Building, the demand can be known everyday as the book is built. But in case of the public issue the demand is known at the close of the issue.

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HOW IS PRICING OF AN IPO DONE?


There are typically two ways in which IPOs are priced. One is called the fixed price method and then there is the Book Building method. IPOs can be made through the fixed price method, book building method or a combination of both in the fixed price method, the price at which the securities are offered is fixed in advance. For instance, Intellect Ltd., a company proposing IPO, may decide to offer shares at Rs.50 per share. In the book building method, however, the investors have to bid for shares within a price band specified by the issuer and the final price is decided after considering the bids received. A price band is nothing but a range of price within which the shares may be offered based on demand. In our example, Intellect Ltd. may instead decide on keeping a price band of Rs.45 to Rs.50 per equity share. In this case, some investors would bid at Rs.45, some at Rs.46, some at Rs.50 and so on. After the IPO is closed and all bids are received, if the company finds sufficient demand at Rs.50, then it may decide to offer shares at that price. In contrast, if sufficient demand is only at Rs.47, for instance, the company may choose to fix Rs.47 as the Issue Price. The prices are decided by the company's board of director, which fixes the band after consulting the book runner. According to SEBI Regulations, the issuer company is allowed a price band (range) of 20%. That is to say that the upper end of the price band (Rs.50 in our example) should not be more than 20% away from the lower end (Rs.45). Intellect Ltd. therefore has fixed a valid price range since the difference between Rs.50 and Rs.45 is less than 20% of Rs.45. In other words, had the price band would have been Rs.45 to Rs.60, then the same cannot be valid because 20% of Rs.45 is Rs.9, hence the maximum upper end of price band would be Rs.54, thus the valid price band has to be Rs.45 to Rs.54 per share.

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Current IPOS in India Current IPO's in India


List of Upcoming IPO's, Current IPO's and Recently Closed IPO's in India Issuer Company Issue Open Issue Close Offer Price Issue (Rs.) Size (Crore Rs.) Olympic Cards Ltd IPO Mar 09, 2012 Mar 13, 2012 30/to 25.00 32/BCB Finance Ltd IPO Feb 23, 2012 Feb 27, 2012 25/8.85 Multi Commodity Feb 22, 2012 Feb 24, 2012 860/-to I 663.31 Exchange of India Ltd 1032/IPO Goodwill Hospital & Dec 30, 2011 Jan 09, 2012 175/-to 62.00 Research Centre Ltd 185/IPO Indo Thai Securities Sep 30, 2011 Oct 05, 2011 70/to 29.60 Limited IPO 84/Flexituff International Sep 29, 2011 Oct 05, 2011 145/-to 104.63 Ltd IPO 155/Taksheel Solutions Ltd Sep 29, 2011 Oct 04, 2011 130/-to 82.50 IPO 150/One life Capital Sep 28, 2011 Oct 04, 2011 100/-to 36.85 Advisors Ltd IPO 110/M and B Switchgears Sep 28, 2011 Oct 05, 2011 180/-to 93.00 Ltd IPO 186/Tijaria Polypipes Ltd Sep 27, 2011 Sep 29, 2011 60/60.00 IPO Swajas Air Charters Ltd Sep 26, 2011 Oct 05, 2011 84/to 37.50 IPO 90/RDB Rasayans Ltd IPO Sep 21, 2011 Sep 23, 2011 72/to 35.55 79/Prakash Constrowell Sep 19, 2011 Sep 21, 2011 130/-to 60.00

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Ltd IPO PG Electroplast Sep 07, 2011 Limited IPO TD Power Systems Ltd Aug 24, 2011 IPO SRS Limited IPO Aug 23, 2011 Brooks Laboratories Ltd IPO Tree House Education & Accessories Ltd IPO L&T Finance Holdings Limited IPO Inventure Growth & Securities Ltd IPO Aug 16, 2011 Aug 10, 2011 Jul 27, 2011 Jul 20, 2011

Sep 12, 2011 Aug 26, 2011 Aug 26, 2011 Aug 18, 2011 Aug 12, 2011 Jul 29, 2011 Jul 22, 2011

138/190/-to 210/256/-to 261/58/to 65/90/-to 100/135/-to 153/51/to 59/100/-to 117/-

120.65 227.00 203.00 63.00 113.83 1,245.00 81.90

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Top Companies: An analysis

Reliance Power IPO has been issued by Reliance Power Limited. Reliance Power IPO was issued on 15th January, 2008 and closed on 18th January, 2008. Reliance Power Limited Company is planning to generate capital worth Rs. 11, 700 crores through the IPO. This makes it the largest IPO in the country as on 17th January, 2008. The price band of the equity shares of Reliance Power IPO has been fixed at Rs. 405- 450 per equity share. The total size of Reliance Power IPO is around 26 crores equity shares. Reliance Power IPO will be listed on the National Stock Exchange (NSE) and also on the Bombay Stock Exchange (BSE). The lead bankers of Reliance Power IPO are Enam Securities, Kotak Mahindra Capital Co, ABN Amro Rothschild, ICICI Securities, JP Morgan Chase & Co, UBS AG and Deutsche Bank AG. The main objective of Reliance Power IPO is that the proceeds from the issue will be used to fund the power generation projects that the company plans to carry out.

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The Cinemax India IPO was launched in the year 2006, for the purpose of expanding the company and setting up theater screens in different locations. The Cinemax India IPO was launched with the purpose of utilizing the funds for meeting the requirements of the capital expenditure of establishing 19 new theater screens throughout the country, at an estimated cost of Rs 110.69 crores. The proceeds from the IPO would also be used for the general corporate purposes which include acquisitions .Cinemax India has filed its red herring prospectus with the Securities and Exchange Board of India (SEBI). Some the places where the Cinemax India is planning to set up theaters are Kolkata, Pune, Guwahati, Nasik, Panipat, Hyderabad, Ahmedabad, Siliguri, Bangalore, Indore, Nagpur, Faridabad, Ghaziabad, Ludhiana and Mumbai. Cinemax India is one of the leading exhibition theater chains in India. It is operating in several locations throughout the country. All together in the year 2006 it had 33 screens in 10 different locations. Cinemax India is a part of the Kanakia Group. In the year 2006, the total annual income was Rs 438.60 million and the net profit was Rs 67.64 million.

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The Maruti IPO has set a price range of Rs. 125 per share above the Floor price of Rs. 115. The subscription for Maruti IPO opened on June 12, 2003 and closed on June 19, 2003. The response to Maruti IPO was overwhelming within the subscription period, which led to an over-subscription of the public offerings of Maruti by more than ten times. The government decided to shell out 85 percent shares of IPO to the non institutional investors and 15 percent shares to the non-institutional high networth individuals. Consequently, government would get Rs.993 crores for 7.94 crores shares. But SEBI recommended that 60 percent can be given to the institutional investors but at least 40 percent should be allotted for the retail investors as well. The government has allotted 60 percent shares to the retail investors and 40 percent shares to the institutional investors. The shares were allotted to the individuals on a pro rata basis. The IPO of Maruti is claimed to be one of the biggest capital market transactions in recent years in India and also the largest Book Built IPO that has been implanted in India till date. Maruti IPO received more than 300,000 applications which is a record in the history of IPO in India. The majority of applicants to these comprise of the Indian retail investors. They received the allotments on the basis of the price range alreadyfixed by the government. A huge number of institutional investors also paid a lot of importance in investing in Maruti.

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IPO SCAMS

YES BANK LTD. CASE


The modus operandi adopted in manipulating the YES Bank Ltd (YBL)'s initial public offering (IPO) allotment involved opening of over 7,500 benami dematerialised accounts. These accounts were with the National Securities Depository Ltd (NSDL) through Karvy Stock broking Ltd (Karvy-DP). Of the 13 erring entities, the chief culprits identified by SEBI were Ms Roopalben Panchal and Sugandh Estates and Investments Pvt Ltd.While Ms Panchal opened 6,315 benami DP accounts, another entity Sugandh opened 1,315 benami accounts. Each of these accounts applications were made for 1,050 shares, paying application money of Rs 47,250 each. By applying for small lots (1,050 shares through each accounts), they misused the retail allotment quota stipulated for IPOs. The shares allotted in IPO to the benamis of Ms Panchal and Sugandh would have otherwise gone to genuine retail applicants. The IPO of YBL opened on June 15, 2005 and its shares were listed on the BSE and the NSE on July 12, 2005. It was observed that Ms Panchal had transferred 9,31,600 shares to various entities in seven off-market transactions on July 11 a day prior to the listing and commencement of trading on the stock exchanges. In order to get an allotment of 9,31,600 shares, Ms Panchal would have had to apply for crores of shares involving many crores of rupees in application money. However, Ms Panchal's name did not appear in the list of top 100 public issue allottees. Thus, it was suspected that Ms Panchal must have made multiple applications or that other applicants were acting as a front for her. Ms Panchal had applied for only 1,050 shares in the YES Bank IPO, paying the application money of Rs 47,250. And she did not receive any allotment in the IPO. On July 6, Ms Panchal received 150 shares each from 6,315 allottees through offmarket transactions aggregating 9,47,250 YBL shares. Curiously, as per the dematerialised account data furnished by NSDL, of the above 6,315 entities as many as 6,221 entities have a same address in Ahmedabad. There are three more addresses of locations in Ahmedabad, which have been linked to Ms Panchal. All the 6,315 entities have their bank accounts with Bharat Overseas Bank and demat

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accounts with Karvy-DP. By applying for the maximum possible number of shares per applicant while being categorised as retail applicant and by putting in large number of applications in the lot of 1,050 shares, Ms Panchal and her associates (real or fictitious) have attempted to corner the maximum possible number of shares in the IPO allotment. This tantamounts to an abuse of IPO allotment process, the SEBI order said. A similar modus operandi was adopted by Sugandh, which received 150 shares each from 1,315 dematerialised accounts aggregating 1,97,250 shares in off market transactions. According to SEBI findings, Ms Panchal and others booked profits to the tune of about Rs 1.70 crore on the day of the listing of YES Bank shares.

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Investing Tips for IPOS in Indian Stock Market


Initial Public offering of any upcoming company is very crucial both for company's growth as well as for investors confidence, These days there are lots of IPO's arriving in stock markets but all of them are not the best companies or consist of best management . So investor should follow atleast these tips for investing in IPO: An Investor should first know how the management of the company is as this is the single most important factor which comes into play for growth of the company. Investors should not be misguided by the advertisements in newspapers about the company whose IPO is to come as these advertisements show wrong picture of the company, And we cannot trust advertisements in world where print media is on sale and has lost values, Even the best selling English daily in India tops the list of improper and wrongly edited news, To keep a check on these false advertisements by the IPO companies SEBI is going to change guidelines for advertising by companies and this would make sure that the facts shown in advertisement is same as that in Red herring prospectus of the IPO. And lastly the most important tip for IPO investing is that you should wait for atleast 3 to 4 days before purchasing the shares as in 3-4 days the hype of IPO created would settle and true picture of interest being shown by investors would be in place. For Initial Public offering of very large companies it will be a high profile event, which will attract a large number of institutional fund managers as well as smaller private investors to put their money into the IPO Such IPO's follow an upward trends for few sessions until coming back to original levels and even below that, looking at the sentiments, The biggest such IPO failure is ADAG's RNRL which was so much oversubscribed due to the Reliance factor but company could not flourish at all, So one should be very careful, although chances of such huge failures are very less.

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Conclusion
IPO is used by a company to raise its funds. The extra amount obtained from public may be invested in the development o f the company, although it costs a little to a company but it gives a way to get more money for long term investments.

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Bibliography
WEB BASED
http://www.investopedia.com http://www.reliancemoney.com http://www.moneycontrol.com

http://www.nseindia.com

BOOK BASED
Share Market Book : By Tarun Shah IPO Decision : By Jason Draho

SPECIAL THANKS TO: Grading of IPOs- The Hindu Business Line IPO, IPOs India News Market News - Economic Times

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