Methods of floating new issues
- 1. • Submitted to: • Ms Alka • Submitted by: • Preeti • 19pba018 • MBA (3rd sem) Methods of floating new issues.
- 2. 1. Through prospectus 2. Bought out deals 3. Private placemen 4. Rightss issue 5. Book building Methods of floating new issues.
- 3. 1. Through Prospectus • “According to the ‘companies(amendment) act, 1985,-application forms for shares of a company should be accompanied by a memorandom. ‘’ • Under this methods, the issuing company directly offers to general public or institutions a fixed no. Of shares at a stated price through a document called prospectus. • The prospectus should contain: 1. Name of the company. 2. Address of the registered office of the company. 3. Existing and proposed activities. 4. Locatipn of the company. 5. Name of the directors 6. Authorized and issued capital to the public. 7. Dates of opening and closing the subscription. 8. Minimum subscription. 9. Name of brokers/lead managers/merchant bankers/registrar of the issue. 10. Floor price and cap price of the share.
- 4. Merits:- How a company presents itself to the public that works, infact it is about ‘how brilliantly one sells onself. ‘
- 5. 2.Offer for sale • Promoter places his shares with an investment banker(bought out dealers or sponsor) who offer it to the public at a later date Promoter --- Investment banker--- Public • Hold on period is 70 days to more than a year • Bought out dealer decides the price after analyzing the viability, the gestation period, promters’background and future protections. • Bought out dealers sheds the shares at a premium to the public.
- 6. Merits:- • No wastage of time and money (good for small companies) . • Fir new companies it is not an easy task to off load the shares as per the SEBI guidelines, thus the sponsors help them.
- 7. 3.Private placement • The issue is placed into small numbers of financial institutions, corporate bodies, etc. • The financial intermediateries purchase the shares and sell them. • NO need of underwriting as the term if issues are already negotiated between company and purchasing Intermiedriaries.
- 8. Merits :- • Time effective. • Cost effective. • Structure effectiveness. • Access effective.
- 9. 4.Right issues • According to the section 81 of the comapnies act 1956, if a compsny wants to increase its subscribed by allotment of further shares after two years from the date if its formation or one year from yhe date of its allotment, which ever is earlier, should offer share first to its existing shareholders in proportion to the share held by them at the time of offer.
- 10. Right issue • Certain conditions:- • A notice should be issued to specify the number of shares issued. • The time given to accept should not be less than 15 days. • Right of the share holders to renounce the offer in favor of others.
- 11. 5.Book building • A method that resemble like survey /keeping records. • The printer’s representatives/employees used to visit public. • They made their plans, pricing... Etc., keeping the public interest and their opinion in mind.
- 12. Thank you…!