Sub: CH: 2 new issue Market:

Student Name:

Roll no Name
(51) Moxit
(52) Nemik
(53) Saloni
(54) Nehal
(55) Sandip
(56) Dhaval
(57) Dimpi
(58) Jyoti
(59) Tejas
Types of underwriters:-

The underwriters in India may be classified into 2 categories:-

1. institutional underwriters
2. non- institutional underwriters

(1) institutional underwriters :-

They are some institutional underwriters

• life insurance corporation of India (LIC)
• unit trust of India (UTI)
• industrial development bank of India (IDBI)
• industrial credit and investment corporation of India (ICICI)
• commercial bank and general insurance company

The patterns of underwriting of the above institutional underwriters differ vastly in

India.

LIC and UTI have purchased industrial securities from the new issue market with a view
to holding them on their own portfolio they have a performance for underwriting share in
large and well established firms.

The development banks have given special attention to the issue in backward sates and
industries in the priority list.

The thrust of the development banks is also towards small and new issues which do not
have adequate support from other institutions.

General insurance companies have shown preference in underwriting the securities of

fairly new issue
 (2) Non-Institution underwritings:

• The Non institutional underwriters are brokers.

• They guarantee shares only with a view to earn commission from the
company floating the issue.
• They are known to offload the shares later to makes a profit.
• The brokers work with profit motive In underwriting industrial securities.
• After the elimination of forward trading, stock exchange brokers have
begun to take an underwriting business.
• The percentage of securities underwriting to the total private capital issue
varies between72% to 97%.

Advantages of underwriting:

Underwriting assume great significant as it offer the following advantage to the

issuing company.

• The issuing company is received from the risk of finding buyer for the
issue offered to the public.
• The company is assured of getting the minimum subscription within the
stipulated time a statutory obligation to be fulfilled by the issuing
company.
• Underwriters undertake the burden of highly specialized function of
distributing securities.
• They provided expert advice with regard to pricing of issue the size of
issue etc.
• Public confidence on the issue enhanced when underwritten is done by
reputed underwriters.
Distribution:

Distribution is the function of sale of securities to ultimate investors this services

is performed by brokers and agents who maintain a regular direct contact with
ultimate investors

E.X: Karvy