IPOs FPOs

INITIAL PUBLIC OFFERING

It is an offering of either a fresh issue of securities or

an offer for sale of existing securities or both by an unlisted company for the first time to the public ELIGIBILITY NORMS (SEBI) Net tangible assets at least Rs.3 crores for 3 full years of which not more than 50% held in monetary assets Distributable profits in atleast 3 out of the preceeding 5 years Net Worth of at least Rs. 1 crore in 3 years

IPOs
If there is a change in the companys name at least

50% revenue for preceeding one year from the new activity Issue size should not exeed 5 times the pre-issue net worth Offer document prospectus in case of public issue or offer for sale and letter of offer in case of a rights issue

IPOs.
OTHER DETAILS:
EPS for 3 years, P/E ratios, average return on Net

worth, NAV per share as per last Balance sheet, Accounting ratios etc. Credit rating , risks in first issue, internal and external risk factors, underwriting agreements, objects of funding , funding plans, schedule of implementation, dividend policy, other legal and statutory disclosures

IPOs
Filing a draft offer document SEBI 21 days before

filing with ROC SEBI specify the changes Disclosure and Investor Protection (DIP) guidelinecomplied by Merchant Banker I. Fixed price method II. Pricing under Book building III. Differential pricing firm allotment at the price higher than the price offered to public

IPOs.
DIP guidelines 1. reservation on firm basis

2. reservation to employees on competitive price basis 3. reservation for promoters in case of a new company Issue of Debt instruments two conditions: 1.Credit rating from two credit rating agencies as per SEBI (not less than investment grade) 2. No default in payment of interest, principal

IPOs.
Non-convertible debt-instrument if allotment less

than 50 allottees cancel the issue and refund it within 8 days if not , penalty rate @15% p.a.

FPOs
FOLLOW ON PUBLIC OFFERING
Subsequent or seasoned public offering Is an offer of sale of securities by a listed company

FPOs are usually for growth plans

PRIVATE PLACEMENT The direct sale of newly issued securities by the issuer

to a small number of investors through merchant bankers

ON-LINE IPOs
Norms of SEBI (DIP) followed Sec 58-68A of Companies Act 1956 Either trough the on-line system or through the

existing banking channels Issuer companys agreement with stock exchanges offering on-line IPOs Appointment of brokers and Merchant bankers having electronic connectivity with Ses SEs appoint SEBI registered brokers to accept applications and place the orders

ON-LINE IPOs..
Brokers accept orders from the clients
They send application money to Registrar of the issue If the client fails to pay application money, broker pays

If broker fails, he is declared as Defaulter

If public issues of Rs.10 crore or more, the registrar

opens collection centres Delhi, Kolkata, Chennai & Mumbai Broker opens an Escrow a/c and deposits margin money

ON-LINE IPOs
List of names of all brokers appointed appears in the

prospectus Lead managers and Registrars also appear in the prospectus The issuer company has the option of getting listed in other Stock exchanges too.