1. PRIMARY MARKET

2. Primary Market
provides the channel for sale of
new securities
to raise resources to meet their
requirements
issue the securities in domestic
market and/or international market.

3. Terminology
• Nominal or stated amount
Face value assigned by issuer
• When security sold above its
Premium face value
• When security sold at less
Discount than face value

4. Classification of issue of shares
Fresh Issue
Initial Public
Offering
Offer for Sale
Public
Fresh Issue
Issues Further Public
Rights
Offering
Offer for Sale
Private
Placement

5. Initial Public Offering (IPO)
Made by Unlisted Companies
Either Fresh An offer for sale
Both for the first
issues of of its existing
time to the public
securities securities

6. Advantage of IPO
No Cost of Huge amount
capital can be raised
Correct
Brand Value
Valuation

7. Disadvantage of IPO
Disclosure of
information
Decision’s take
time
Cost of IPO

8. Parties to IPO
Registrar Underwriter
Lead Merchant
Manager Banker

9. Who decides the price of an
issue?
• When issuer & Lead
Merchant Banker fix a
Fixed Price price
Price discovery • When the company and
Lead Manager stipulate
through Book the price and leave it to
Building market forces

10. Further Public Offering
When an already listed company
makes
Either fresh issue of securities to the
public
Or an offer for sale to the public
Through offer document

11. Rights Issue
When listed company issue fresh securities
To existing shareholder
Suites for companies who would like to raise
capital

12. Private Placement / Preferential
Issue
• Issue of shares or convertible securities by
1. listed companies
• Which is neither right issue nor a public issue
2.
• Faster way for company to raise equity
3. capital

13. Issue Price
Price at which
company shares are
offered
Initially in primary
market

14. Market Capitalization
1. • Market value of a quoted company
2. • MC = Market Price * No. of Shares

15. Difference between Public Issue
& Private Placement
Public Issue Private Placement
• When issue made for • Issue is made to a select
general public and any set of people.
investor at large.
• As per companies • An allotment is made to
act, 1956, an issue less than 50 persons.
becomes public when
result it allotment to 50
persons or more.

16. Book Building

17. Cut –Off Price
Any price which above the floor
price
Decided by Issuer & Lead
Manager
After considering the book &
investors appetite for the stock

18. Floor Price
It is the minimum price at which
bids can be made

19. Price Band
The prospectus may contain
Either the floor price for the Price Band within which the
securities investor can bid
Cap should not be more than 120% of the floor price
Price decided by The Company consultant with The
Merchant Banker

20. Documents in IPO
Draft Offer Abridged
Prospectus
Document Prospectus

21. Draft Offer Document
Offer document in draft stage
Filled with SEBI
At least 2 days prior to the filling of
the offer document with ROC

22. Abridged Prospectus
Shorter version of the
prospectus
Contains all the salient
features of a prospectus
Applications form of
public issues.

23. Lock in
Freeze on the sale of shares for a certain
period of time
Ensure that company should continue to
hold some minimum percentage
After public issue

24. Listing of Securities
Admission of securities of an issuer to
trading
Dealing on a stock exchange through a
formal agreement
Provide liquidity and marketability to
securities
Provide mechanism for effective control
& supervision of trading

25. Listing Agreement
• Specifies the terms & conditions
1. of listing
• Disclosures shall be made by a
2. company on continuous basis to
the exchange

26. Delisting of Securities
Permanent removal of securities of a
listed company
From the stock exchange
Securities of that company no
longer be traded that stock exchange

27. How to apply in IPO’s ?
Online
Offline