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Initial Public Offer Secondary Public Offer Rights Issue Private Placement Preferential Allotment Dilution Obtaining a Term Loan
Venture Capital
Features of Venture Capital
High risk, high return Subscribes to equity or quasi-equity financing instruments Takes active interest in guiding the assisted firm Financial burden for the assisted firm tends to be negligible in the initial years. VC normally plans to liquidate its investment after 3 to 7 years.
Costs of Going Public Adverse Selection Dilution Loss of Flexibility Disclosures Accountability Costs
Eligibility for an IPO Net tangible assets of at least 3 crore in each of the preceding 3 years. A track record of distributable profits for at least 3 out of the immediately preceding 5 years. Net worth of at least 1 crore in each of the preceding 3 financial years. Issue size does not exceed 5 times the pre-issue net worth.
If above mentioned conditions are unsatisfied Company can make an IPO of equity shares or convertibles only if
The issue is made through book-building process, with at least 50% of the issue size being allotted to the Qualified Institutional Buyers (QIBs) OR The project has at least 15% participation by the Financial Institutions/ Scheduled Banks and at least 10% of the issue size shall be allotted to QIBs The minimum post-issue nominal value of equity capital of the company shall be 10 crore or there shall be a compulsory market making for at least 2 years from the date of listing of the shares.
Company files the prospectus with Registrar of Companies (ROC). Company releases a mandatory advertisement, called announcement advertisement 10 days prior to the opening of the issue. This has to conform to Form 2A, also called the abridged prospectus.