Equity shares ppt
- 1. Equity Shares By: Maria Bhalerao Namrata Tiwari Neenoy gonsalves Shanson Paul Ritesh Shinde Gaurav Bhansal Chetan Jadhav
- 2. What is Financial Market A system comprised of individuals and institutions, instruments, and procedures that bring together borrowers and savers. It help to facilitate: Price discovery To raise the capital Cash liquidity
- 4. Equity Shares Equity shares were earlier known as ordinary shares. The holders of these shares are the real owners of the company.
- 5. Features of Equity shares Right to Control Pre - emptive Right Owned Capital Transfer of Shares Equal Rights Transfer of Shares
- 6. Advantages No Obligation to pay Dividend Capital Gain Limited Liability Owner of the company Right Issue Long term and permanent capital
- 7. Disadvantages No Flexibility in capital structure Speculation Uncertain and Irregular Income Trading on Equity not possible Limited control
- 8. Types Authorised share capital Issued share capital Subscribed share capital Paid up share capital
- 9. Perference Shares They have fixed rate of return They do not enjoy normal voting rights These shares are called hybrid financing
- 10. Advantages Appeal to caution investors No obligation for dividend No interference Trading on equity
- 11. Disadvantages Fixed obligation Limited appeal Low return No voting rights
- 12. Preference can be traded on stock exchange Preference shares are quasi-equity instruments that have limited voting rights and give specific dividend that is paid out before a company distributes dividend to regular shareholders. According to data compiled from depositories, in the last three years, more than Rs 25,000 crore was raised through preference share issuance by 295 companies. In 2011-12, 147 issuers tapped the market to raise Rs 10,000 crore.
- 13. IPO • Definition: A company’s first equity issue made available to the public. • This issue occurs when a privately held company decides to go public • Also called an “unseasoned new issue.
- 14. Current Example of IPO Indigo IndiGo Airlines IPO to open on October 27, price band Rs 700-765 Indigo lines up IPO to raise an estimate of 2500 cr Indigo jump 20% in 2 day
- 15. IPO Promotor : Rahul Bhatia & Rakesh Gangwal Lead Manager: Barclays, citigroup ,JP morgan Issue Detail: »» Issue Open: Oct 27, 2015 - Oct 29, 2015 »» Issue Type: 100% Book Built Issue IPO »» Issue Size: Equity Shares of Rs. 10 »» Issue Size: Rs. 1,272.20 Crore »» Face Value: Rs. 10 Per Equity Share »» Issue Price: Rs. 700 - Rs. 765 Per Equity Share »» Market Lot: 15 Shares »» Minimum Order Quantity: 15 Shares »» Listing At: BSE, NSE
- 16. CCD Café Coffee Day plans to raise Rs 1150 crore through IPO which open on 14, October 2015 and close on 16, October 2015. It has fixed a price band of Rs 316-328 for the share sale. Following about the IPO:- V G Siddhartha, who is the main promoter as well as Chairman and MD, holds 54.78 percent stake, while all promoters together have 92.74 percent holding in the company.
- 17. Coffee Day Enterprises is the parent company of the Coffee Day Group and operates coffee business through a subsidiary, Coffee Day Global Ltd (earlier known as Amalgamated Bean Coffee Trading Company Limited) and its subsidiaries. Company is one of the largest exporters of Indian coffee beans, primarily to Europe, Japan and the Middle East. Axis Bank, Citigroup Global Markets, Edelweiss Capital, Kotak Mahindra Capital, Morgan Stanley India and YES Bank are lead managers of the IPO
- 18. Issue Detail: »» Issue Open: Oct 14, 2015 - Oct 16, 2015 »» Issue Type: 100% Book Built Issue IPO »» Issue Size: Equity Shares of Rs. 10 »» Issue Size: Rs. 1,150.00 Crore »» Face Value: Rs. 10 Per Equity Share »» Issue Price: Rs. 316 - Rs. 328 Per Equity Share »» Market Lot: 45 Shares »» Minimum Order Quantity: 45 Shares »» Listing At: BSE, NSE
- 19. What is depository receipts ““a security designed to make investinga security designed to make investing outside of one’s home country easieroutside of one’s home country easier
- 20. Types of ADRs Non sponsored •Traded on the OTC market No formal agreement between bank and company •The underlying company has no commitment Sponsored Varying degrees of commitment a company can make to the DR Program
- 21. Level 1 sponsored One bank acts as a transfer agent for the company Limited reporting requirements with SEC Periodic financials not required Traded on the OTC market Most common way DRs are sold in the U.S.
- 22. Level 2 sponsored Under SEC regulation Must file form equivalent to the U.S. Form 10-k annually in compliance with GAAP Listed on U.S. Stock Exchanges like NYSE, NASDAQ, and AMEX Provides more exposure in U.S. markets for company
- 23. Level 3 Sponsored Requirements for listing similar to the strictness of a U.S. company Form F-1 required, which resembles the U.S. prospectus Registered with SEC Information on company can be easily found by investors Necessary if company intends to issue new shares in U.S. market
- 24. What is GDR A global depository receipt (GDR), also known as international depository receipt (IDR), is a certificate issued by a depository bank, which purchases shares of foreign companies and deposits it on the account. They are the global equivalent of the original American depository receipts (ADR) on which they are based. GDRs represent ownership of an underlying number of shares of a foreign company and are commonly used to invest in companies from developing or emerging markets by investors in developed markets.
- 25. Novation Process When buyer becomes seller and seller became the buyer all this process is called as novation process
- 26. ADR of HDFC Bank . HDFC Bank is the second largest private sector bank in the country (after ICICI Bank) in terms of asset size. The bank has tripled its share from 1.2% of total non-food credit in FY02 to 4.2% in FY12. Retail assets constituted 51.3% of advances in FY12. Its group companies, HDFC Standard Life (insurance), HDFC AMC (mutual funds) and HDFC Securities (equities) add scalability to the bank's offerings
- 27. HDFC Bank plans to raise Rs1,500-2,000 crore through domestic institutional investors and the rest from foreign investors “The other approval we have got is to come up with a level 1 American depositary receipt (ADR) which does not involve the issue of fresh capital. It is just a conversion of existing equity shares into ADR. It creates a larger platform of people who can buy the shares.
- 28. Under HDFC’s proposed sponsored level 1 ADR programme, up to 10 per cent of its existing paid-up capital will be converted into ADRs.
- 29. (NOV-9/2015)American Depository Receipts of HDFC Bank Price (US$)58.88 Open (US$)59.14 High (US$)59.79 Low (US$)58.11 % Change- 0.59 Volume620,772 Value (US$)36,551, 055 52-Week H/L65.44 / 47.60
- 30. Conclusion Companies come to the stock market in a variety of different ways and for a variety of reasons. As a private investor, you can sometimes get an allocation of newly-issued shares, but often the issue will be confined to institutional investors. With internet shares, and the movement towards direct online IPOs, this may change for the better. Most of the time you will be trading in a company's ordinary shares on the secondary market. Companies issue other types of share - notably preference shares, convertibles, and warrants - and even if you don't own them they may have an effect on your dividend entitlement if they dilute earnings. A scrip issue is designed to improve marketability of ordinary shares, and does not dilute your ownership. A rights issue is designed to raise more money for the company, and existing shareholders will be invited to buy first. You have a choice about whether to exercise your rights, but if you do not, your ownership may be diluted.