Assignment

on
The Initial Public Offering (IPO) Process

Prepared By

Name:
ID:

Prepared
For
Prof. Dr. Shyamapada Biswas

School of Business
Ahsanullah University of Science and Technology

Dhaka

August 2020

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 CONTENTS

CONTENTS PAGE
Chaper-1
1. SIGNIFICANCE OF IPO 3
2. SIGNIFICANCE TO THE COMPANY 8
3. SICLNIFICANCE TO THE SHAREHQIDERS 9
4. THE RISK FACTOR 11
Chaper-2
4.1 UNPREDICIABILITY 14
4.2 NOT PAST TRACK RECORD OF THE COMPANY
4.3 POTENTIAL OF STOCK MARKET
5. RISK ASSESSTMENT
5.1 BUSINESS RISK
5.2 FINANCIAL RISK
5.3 MARKET RISK
6. ANALYSING AN IPO INV ES T ME N T
6.1 POTENTIAL INVESTORS AND THEIR OBJECTIVES
6.1.1 INCOME INVESTOR
6.1.2 GROINTRINVISTOR
6.1.3 SPECUL.ATOR
7. INVESTOR RESEARCH
7.1BUSINESS OPERATIONS
7.2 FINANCIAL OPERATIONS
7 . 3 M A R K E T I N G O P E R A T I O NS
8. IPO INVESTMENT STRATEGIES
8.1 UNDERSTAND THE WORKING OF IPO
8.2 GATHER KNOWLEDGE
8.3 INUSECTAT1 BEFORE INVESTING
8.4 KNOW YOUR BROKER
8.5 MEASURTE THE RISK INVOLVED
8.6 INVEST AT YOUR OWN RISK
9. PRICING OF AN IPO
9.1 PROCESS
9.2 IPO PRICING DIFFERENCFS
10. UNDERPRICING AND OVERPRICING OF IPO's
10.1 IINDERPRICING
10.2 OVERPRICING
11. PRINCIPAL STEPS IN AN IPO
11.1 APPROVAL OF BOD
11.2 APPOINTMENT OF LEAD MANAGER
11.3 APPOINTMENT OF OTHER INTERMEDIARIES
11.4 FILING OF PROSPECTUS WITH REGISTRAR OF THE COMPANIES
11.5 PRINTING AND DISPATCH OF PROSPECTUS
11.6 FILING OF INITIAL LISTING APPLICATION
11.7 PROMOTION OF THE ISSUE
11.8 STATUTORY ANNOUNCEMENT
11.9 COLLECTIONS OF APPLICATIONS
11.10 PROCESSING OF APPLICATIONS
11.11 ESTABLISHING THE LIABILITY OF THE UNDERWRITERS
11.12 ALLOTMENT OF SHARES
11.13 LISTING OF THE ISSUE
12. BOOK BUILDING PROCESS
12.1 USING BOOK BUILDING PROCESS FOR DISCOVERY OF PRICE
12.2 Allotment 27
12.3 THE PROCESS 28
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 The Initial Public Offering (IPO) Process

1. SIGNIFICANCE OF IPO

Significance of investing in IPO can be studied from two (2) view points: For Company and For
Investor.

2. SIGNIFICANCE TO THE COMPANY

When a privately held corporation needs additional capital, it can borrow cash or sell stock to
raise needed funds. Or else, it may decide to ‘go public. ‘Going Public’ is the best choice for a
growing business for the following reasons:
 The costs of an initial public offering are small as compared to the costs of borrowing
large sums of money for ten years or more.
 The capital raised never has to be repaid.
 When a company sells its stock publicly, there is also the possibility for appreciation
of the share price due to market factors not directly related to the company.
 It allows a company to tap a wick pool of investors to provide it with large volumes of
capital for future growth.

3. SICLNIFICANCE TO THE SHAREHQIDERS

The investors often see WO as an easy way to make money. One of the most attractive
features of an IPO is that the shares offered are usually priced very low and the company's
stock prices can increase significantly during the day the shares are offered. This is seen
as a good opportunity by 'speculative investors' looking to notch out some short-term
profit The `speculative investors' are interested only in the short-term potential rather than
long-term gains.

4. THE RISK FACTOR

Investing in TPO is often seen as an easy way of investing, but it is highly risky and many
investment advisers advise against it unless you are particularly experienced and
knowledgeable. The risk factor can be attributed to the following reasons:

4.1 UNPREDICIABILITY

The Unpredictable nature of the IPO's LS one of the major reasons that investors advise against
investing in IPO' s. Shares are initially offered at a low price, but they see significant
changes in their prices during the day. It might rise significantly during the day, but then it
may fall steeply the next day.

4.2 NOT PAST TRACK RECORD OF THE COMPANY

No past track record of the company adds further to the dilemma of the shareholders as to
whether to invest in the IPO or not. With no past track record, it becomes a difficult choice
for the investors to decide whether to invest in a particular IPO or not, as there is basis to decide
whether the investment will be profitable or not.
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4.3 POTENTIAL OF STOCK MARKET

Returns from investing in TPO are not guaranteed The Stock Market is highly volatile. Stock
Market fluctuations widely affect not only the individuals and household, but the economy as a
whole. The volatility of the stock market makes it difficult to predict how the shares will
perform over a period of time as the profit and risk potential of the IP0 depends upon the stare
of the stock market at that particular time.

5. RISK ASSESSTMENT

The possibility of buying stock in a promising start-up company and finding the next
success story has intrigued many investors. But before taking the big step, it is essential to
understand some of the challenges, basic risks and potential rewards associated with investing
in an IPO.

This has made ‘Risk Assessment’ an important part of Investment Analysis. Higher the desired
returns, higher would be the risk involved. Therefore, a thorough analysis of risk associated with the
investment should be done before any consideration.

For investing in an IPO, it is essential not only to know about the working of an IPO, but we also need
to know about the company in which we are planning to invest. Hence, it is imperative to know:
o The fundamentals of the business
o The policies and the objectives of the business
o Their products and services
o Their competitors
o Their share in the current market
o The scope of their issue being successful

It would be highly risky to invest without having this basic knowledge about the company. There are
3 kinds of risks involved in investing in IPO

5.1 BUSINESS RISK

It is important to not whether the company has sound business and management policies,
which are consistent with the standard norms. Researching business risk involves examining the
business model of the company.

5.2 FINANCIAL RISK

Is this company solvent with sufficient capital to suffer short-terra business setbacks? The liquidity
position of the company also needs to be considered. Researching financial risk involves examining
the corporation's financial statements, capital structure, and other financial data.

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5.3 MARKET RISK

it would beneficial to check out the demand for the IPO in the market, i.e., the appeal of the
IPO to other investors in the market. Hence, researching market risk involves examining the
appeal of the corporation to current and future market conditions.

6. ANALYSING AN IPO INVESTMENT

6.1 POTENTIAL INVESTORS AND THEIR OBJECTIVES

Initial Public Offering is a cheap way of raising capital, but all the same it is not considered
as the best way of investing for the investor. Before investing, the investor must do a
proper analysis of the risks to be taken and the returns expected. He roust be clear about the
benefits he hope to derive from the investment. The investor must be clear about the objective
he has for investing, whether it is long-term capital growth or short-term capital gains. The
potential investors and their objectives could be categorized as:
 Income investor
 Growth investor
 Speculator

6.1.1 INCOME INVESTOR

An 'income investor' is the one who is looking for steadily rising profits that will be
distributed to shareholders regularly. For this, he needs to examine the company's
potential for profits and its dividend policy.

6.1.2 GROINTRINVISTOR

A growth investor' is the one who is looking for potential steady increase in profits
that are reinvested for further expansion. For this he needs to evaluate the company's
growth plan, earnings and potential for retained earnings.

6.1.3 SPECUL.ATOR

A speculator' looks for short-term capital gains. For this he needs to look for potential
of an early market breakthrough or discovery that will send the price up quickly with
little care about a rapid decline.

7. INVESTOR RESEARCH

It is imperative to properly analyze the IPO the investor is planning to invest into. He needs
to do a thorough research at his end and try to figure out if the objectives of the company
match his own personal objective S. or not. The unpredictable nature of IPO and volatility of
the stock market adds greatly to the risk factor. So, it is advisable that the investor does his
homework, before investing. The investor should know about the following:

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7.1 BUSINESS OPERATIONS

Followings issues relating business operations must be known:

 What are the objectives of the business?
 What are its management policies?
 What is the scope for growth?
 What is the turnover of the labour force?
 Would the company have long-term stability?

7.2 FINANCIAL OPERATIONS

Followings issues relating business operations of the company must be known:

oWhat is the company’s credit history?
o W ha t is t he co mp an y’ s l iq ui di ty po s i ti on ?
oAre there any defaults on debts?
oCompany's expenditure in comparison to competitors.
oCompany's ability to pay-off its debts.
oWhat are the projected earnings of the company

7.3 MARKETING OPERATIONS

Followings issues relating marketing operations of the company must be known:

Who are the potential investors?
What is the scope for success of the WO?
What is the appeal of the IPO for the other, investors?
What are the products and services offered by the corn
Who are the strongest competitors of the company?

8. IPO INVESTMENT STRATEGIES

Investing in IPOs is much different than investing in seasoned stocks. This is because there
is limited information and research on IPOs, prior to the offering. And immediately following
the offering, research opinions emanating from the under writers are in variably positive.
There are some of the strategies that can be considered before investing in the IPO:
o Understand the Working of IPO
o Gather Knowledge
o Investigate before Investing
o Know Your Broker
o Measure the Risk Involved
o Invest at Your own Risk

8.1 UNDERSTAND THE WORKING OF IPO

The first and foremost step is to understand the working of an IPO and the basics of an
investment process. Other investment options could also be considered depending upon the
objective of the investor.

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8.2 GATHER KNOWLEDGE

It would be beneficial to gather as much knowledge as possible about the 70 market, the
company offering it, the demand for it and any offer being planned by a competitor.

8.3 INUSECTAT1 BEFORE INVESTING

The prospectus of the company can serve as a good option for finding all the details of the
company. It gives out the objectives and principles of the management and will also cover the
risks.

8.4 KNOW YOUR BROKER

This is a crucial step as the broker would be the one who would majorly handle your
money. IPO allocations are controlled by underwriters. The first step to getting IPO
allocations is getting a broker who underwrites a lot of deals.

8.5 MEASURTE THE RISK INVOLVED

TPO investments have a high degree of risk involved. It is therefore, essential to measure
the risks and take the decision accordingly.

8.6 INVEST AT YOUR OWN RISK

Finally after the homework is done, the big step needs to be taken. All that can be
suggested is to invest at your own risk. Do not take El risk greater than your capacity.

9. PRICING OF AN IPO

The pricing of an IPO is a very critical aspect and has a direct framer on the success or failure
of the IPO issue. There are many factors that need to be considered while pricing an IPO and
an attempt should be made to reach an IPO price that is low enough to generate interest in
the market and at the same time, it should be high enough to raise sufficient capital for the
company. The process for determining an optimal price for the IPO involves the
underwriters arranging share purchase from leading institutional investors.

9.1 PROCESS

Once the final prospectus is printed and distributed to investors, company management
meets with their investment bank to choose the final offering price and size. The investment
bank tries to fix an appropriate price for the IPO depending upon the demand expected and
the capital requirements of the company.

The pricing of an IPO is a delicate balancing act as the investment firms try to strike a
balance between the company and the investors. The lead underwriter has the responsibility
to ensure smooth trading of the company's stock. The underwriter is legally allowed to
support the price of a newly issued stock by either buying them in the market or by selling
them short.

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9.2 IPO PRICING DIFFERENCFS

It is generally noted, that there is a large difference between the price at the time of issue of
an Initial Public Offering (IPO) and the price when they start trading in the secondary market.

These pricing disparities occur mostly when an IPO is considered ‘hot’, or in other words,
when it appeals to a large number of investors. An IPO is ‘hot’ when the demand for it far
exceeds the supply. This imbalance between demand and supply causes a dramatic rise in the
price of each share in the first day itself, during the early hours of trading.

10. UNDERPRICING AND OVERPRICING OF IPO's

10.1 IINDERPRICING

The pricing of an IPO at less than its market value is referred to as 'Underpricing'. In other
words, it is the difference between the offer price and the price of the first trade.

Historically, IPO’s have always been 'underpriced'. Underpriced IPO helps to generate
additional interest in the stock when it first becomes publicly traded. This might result in
significant gains for investors who have been allocated shares at the offering price. However,
underpricing also results in loss of significant amount of capital that could have been raised had
the shares been offered at the higher price.

10.2 OVERPRICING

The pricing of an IPO at more than its market value is referred to as 'Overpricing' Even
"overpricing" of shares is not as healthy option. If the stock is offered at a higher price than
what the market is willing to pay, then it is likely to become difficult for the underwriters to
fulfill their commitment to sell shares. Furthermore, even if the underwriters are successful in
selling all the issued shares and the stock falls in value on the first day itself of trading, then it
is likely to lose its marketability and hence, even more of its value.

11. PRINCIPAL STEPS IN AN IPO

Followings are the principal steps for an IPO:

Approval of BOD
Appointment of lead managers
Appointment of other intermediaries
Filing the prospectus with SEBL
Filing of the prospectus with the registrar of the companies
Printing and dispatch of prospectus
Filing of initial listing application
Promotion of the issue
Statutory announcement
Collections of applications
Processing of applications
Establishing the liability of the underwriters
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 Allotment of shares
Listing of the issues

11.1 APPROVAL OF BOD

Approval of BOD is required for raising capital from the public.

11.2 APPOINTMENT OF LEAD MANAGER

A Lead manager must be appointed. Normally, the lead manager is the merchant banker who
orchestrates the issue in consultation of the company.

11.3 APPOINTMENT OF OTHER INTERMEDIARIES

Followings intermediaries must be appointed:

 Co-managers and advisors
 Underwriters
 Bankers
 Brokers and principal brokers
 Registrars

11.4 FILING THE PROSPECTUS WITH SEBL

The prospectus or the offer document communicates information about the company and the
proposed security issue to the investing public. All the companies seeking to make a public issue
have to file their offer document with SEM, if SEB1 or public does.

11.4 FILING OF PROSPECTUS WITH REGISTRAR OF THE COMPANIES

once the prospectus have been approved by the concerned stock exchanges and the consent obtained
from the bankers, auditors, registrar, underwriters and others, the prospectus signed by the directors,
must be filed with the registrar of companies, with the required documents as per the companies act
1956.

11.5 PRINTING AND DISPATCH OF PROSPECTUS

After the prospectus is filed with the registrar of companies, the company should print the
prospectus. The quantity in which prospectus is printed should be sufficient to meet requirements.
They should be sent to the stock exchanges and brokers.

11.6 FILING OF INITIAL LISTING APPLICATION

Within 10 days of filing the prospectus, the initial listing application must be made to the
concerned stock exchanges with the listing fees.

11.7 PROMOTION OF THE ISSUE

The promotional campaign typically commences with the filing of the prospectus with the
registrar of the companies and ends with the release of the statutory announcement of the issue.

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11.8 STATUTORY ANNOUNCEMENT

The issue roust be made after seeking approval of the stock exchange. This roust be published at
least 10 days before the opening of the subscription list.

11.9 COLLECTIONS OF APPLICATIONS

The Statutory announcement specifies when the subscription would open, when it would close, and
the banks where the applications can be made. During the period the subscription is kept open, the
bankers will collect the applications on behalf of the company.

11.10 PROCESSING OF APPLICATIONS

Scrutinizing of the applications is done.

11.11 ESTABLISHING THE LIABILITY OF THE UNDERWRITERS

If the issue I sunder subscribed, the liability of the underwriters has to be established.

11.12 ALLOTMENT OF SHARES

Proportionate system of allotment is to be followed.

11.13 LISTING OF THE ISSUE

The detail listing application should be submitted to the concerned stock exchange
along with the listing agreement and the listing fee. The allotment formalities should be
completed within 30 days.

12. BOOK BUILDING PROCESS

12.1 USING BOOK BUILDING PROCESS FOR DISCOVERY OF PRICE

 The company does not come out with a fixed price for its shares; instead, it
indicates a price band that mentions the lowest (referred to as the floor) and the
highest (the cap) prices at which a share can be sold
 Bids are then invited for the shares. Each investor states how many shares s/he
wants and what s/he is willing to pay for those shares (depending on the price band).
The actual price is then discovered based on these bids. As we continue with the
series, we will explain the process in detail.
 According to the book building process, three classes of investors can bid for the
shares:
o Qualified Institutional Buyers: Mutual funds and Foreign Institutional
Investors.
o Retail investors: Anyone who bids for shares under Rs 50,000 is a
retail investor.
o High net worth individuals and employees of the company
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12.2 Allotment

Allotment is the process whereby those who apply are given (allotted) shares. The bids
are first allotted to the different categories and the over-subscription (more shares applied
for than shares available) in each category is determined. Retail investors and high net
worth individuals get allotments on a proportional basis.

Example 1
Assuming you are a retail investor and have applied for 200 shares in an issue, and the
issue is over-subscribed five times in the retail category, you qualify to get 40
shares (200shares/5). Sometimes, the over-subscription is huge or the issue is priced
so high that you cannot really bid for too many shares before the Rs 50,000 limit is
reached. In such cases, allotments are made on the basis of a lottery.

Example 2
Say, a retail investor has applied for five shares in an issue, and the retail category has
been over-subscribed 10 times. The investor is entitled to half a share. Since that isn't
possible, it may then be decided that every 1 in 2 retail investors will get allotment. The
investors are then selected by lottery and the issue allotted on a proportional basis. That is
why there is no way you can be sure of getting an allotment.

12.3 THE PROCESS

Book Building is basically a capital issuance process used in Initial Public Offer (WO) which aids price and
demand discovery. It is a process used for marketi ng a public off er of equity shares of a
company. It is a mechanism where, during the period for which the book for the IPO is open,
bids are collected from investors at various prices, which are above or equal to the ROOT price.
The process aims at tapping both wholesale and retail investors. The offer/issue price is then
determined after the bid closing date based on certain evaluation criteria.

Company plans an IPO via Book-Building

Appoint a Merchant Banker

as Book Runner

Issue a Draft Prospectus (Disclosing every things other than price

Draft Prospectus
Appoint filled
a Merchant with
Banker
concerned authority
as Book Runner

Book runner appoints syndicates and registered intermediaries to

gain subscription
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 Price discovery begins through
the bedding process

Book runner decide upon the allocation and allotments

The book building process has following steps:

o The Issuer who is planning an IPO nominates a Lead merchant banker as a 'book runner'
o The Issuer specifies the number of securities to be issued and the price band for orders.
o The Issuer also appoints syndicate members with whom orders can be placed by the
investors.
o Investors place their order with a syndicate member who inputs the orders into the
'electronic book'. This process is called ‘bidding’ and is similar to open auction.
o A Book should remain open for a minimum of 5 days.
o Bids cannot be entered less than the floor price.
o Bids can be revised by the bidder before the issue closes.
o On the close of the book building period the 'book runner evaluates the bids on
the basis of the evaluation criteria which may include:
Price Aggression
 Investor quality
Earliness of bids, etc
oThe book runner the company concludes the final price at which it is willing to issue
the stock and allocation of securities.
oGenerally, the numbers of shares are fixed; the issue size gets frozen based on the
price per share discovered through the book building process.
oAllocation of securities is made to the successful bidders.
oBook Building is a good concept and represents a capital market which is in the
process of maturing.

Book-building is all about letting the company know the price at which you are willing
to buy the stock and getting an allotment at a price that a majority of the investors are
willing to pay. The price discovery is made depending on the demand for the stock.

The price that you can suggest is subject to a certain minimum price level, called the floor price.
For instance, the floor price fixed for the Maturity’s initial public offering was Rs 115, which
means that the price you are willing to pay should be at or at or above Rs 115.

In sortie cases, as in Biocon, the price band (minimum and maximum price) at which you can
apply is specified. A price band of Rs 270 to Rs 315 means that you can apply at a floor price of
Rs 270 and a ceiling of Rs 315.

If you are not still very comfortable fixing a price, do not worry. You, as a retail investor, have
the option of applying at the cut-off price. That is, you can just agree to pick up the shares at
the final price fixed. This way, you do not run the risk of not getting an allotment because you
have bid at a lower price. If you bid at the cut-off price and the price is revised upwards,
then the managers to the offer may reduce the number of shares allotted to keep it within

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the payment already made. You can get the application forma from the nearest offices of the lead
managers to the offer or from the corporate or the registered office of the company.

How is the price fixed?

All the applications received tilt the last date are analyzed and a final offer price, known as the
cut-off pr ice is arrived at. The final price is the equilibrium price or the highest price at which
all the shares on offer can be sold smoothly.

If your price is less than the final price, you will not get allotment. If your price is higher than
the final price, the amount in excess of the final price is refunded if you get allotment. If you
do not get allotment, you should get your full refund of your money in 15 days after the final
allotment is made. If you do not get your money or allotment in a month's time, you can
demand interest at 15 per cent per annum on the money due.

How do the shares allocate?

As per regulations, at least 25 per cent of the shares on offer should be set aside for retail investors.
Fifty per cent of the offer is for qualified institutional investors. Qualified Institutional
Bidders (QTB) are specified under the regulation and allotment to this class is made at the
discretion of the company based on certain criteria.

QTBs can be mutual funds, foreign institutional investors, banks or insurance companies. If
any of these categories is under-subscribed, say, the retail portion is not adequately
subscribed, then that portion can be allocated among the other two categories at the
discretion of the management. For instance, in an offer for two lakh shares, around 50,000
shares (or generally 25 per cent of the offer) are reserved for retail investors. But if the bids
from this category are received are only for 40,000 shares, then 10,000 shares can be
allocated either to the QM& or non-institutional investors.

The allotment of shares is made on a pro-rata basis. Consider this illustration: An offer is
made for two lakh shares and is oversubscribed by times times, that is, bids are received for
six lakh shares. The minimum allotment is 100 shares. 1,500 applicants have applied for 100
shares each; and 200 applicants have bid for 500 shares each. The shares would be allotted in
the following manner:

Shares are segregated into various categories depending on the number of shares applied for.
In the above illustration, all investors who applied for 100 shares will fall in category A and
those for 500 shares in category B and so on. The total number of shares to be allotted in
category A will be 50,000 (100* 1500*1 /3). That is, the number of shares applied for (100)*
number of applications received (1500)* oversubscription ratio (1/3). Category B will be
allotted 33,300 shares in a similar manner.

Shares allotted to each applicant in category A should be 33 shares (100*1/3). That is,
shares applied by each applicant in the category IT multiplied by the oversubscription ratio.
As, the minimum allotment lot is 100 shares, it is rounded off to the nearest minimum
lot - . Therefore, 500 applicants will get 100 shares each in category A - total shares
allotted to the category (50,000) divided by the minim urn lot size (100).

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 o In category B, each applicant should be allotted 167 shares (500/3). But it is
rounded off to 200 shares each. Therefore, 167 applicants out of 200 (33300/200)
would get an allotment of 200 shares each in category B.
o The final allotment is made by drawing a lot from each category. If you are lucky
you may get allotment in the final draw.
o The shares are listed and trading concern within seven working days of finalization
of the basis of allotment. You can check the daily status of the bids received,
the price bid for and the response form various categories in the Web sites of
stock exchanges. This will give you an idea of the demand for the stock and a
chance to change your mind. After seeing the response, if you feel you have bid at a
higher or a lower price, you can always change the bid price and submit a revision
form

The traditional method of doing IPOs is the fixed price offering. Here, the issuer and the
merchant banker agree on an "issue price" - e.g. Rs. 100. Then one has the choice of
filling in an application form at this price and subscribing to the issue. Extensive
research has revealed that the fixed price offering is a poor way of doing IPOs. Fixed
price offerings, all the world, suffer from `IPO under pricing'. In India, on average, the
fixed-price seems to be around 50% below the price at first listing; i.e. the issuer obtains
50% lower issue proceeds as compared to what might have been the case. This average
masks a steady stream of dubious IPOs who get an issue price which is much higher than
the price at first listing. Hence fixed price offerings are weak in two directions: dubious
issues get overpriced and good issues get underpriced, with a prevalence of under pricing
on average.

What is needed is a way to engage in serious price discovery in setting the price at the
IPO. No issuer knows the true price of his shares; no merchant banker knows the true
price of the shares; it is only the market that knows this price. In that case, can we just
ask the market to pick the price at the IPO?

Imagine a process where an issuer only releases a prospectus, announces the number of
shares that are up for sale, with no price indicated. People from all over India would bid
to buy shares in prices and quantities that they think fit. This would yield a price.
Such a procedure should innately obtain an issue price which is very close to the price at
first listing - the hallmark of a healthy IPO market.

Recently, in India, there had been issue from Hughes Software Solutions which was a
milestone in our growth from fixed price offerings to true price discovery IPOs. While
the HSS issue has many positive and fascinating features, the design adopted was still
riddled with flaws, and we can do much better.

DocumentsRequired:
o A company coming out with a public issue has to come out with an Offer
Document/ Prospectus.
o An offer document is the document that contains all the information you need
about the company. It will tell you why the company is coming is out with a
public issue, its financials and how the issue will be priced
o The Draft Offer Document is the offer document in the draft stage. Any
company making a public issue is required to file the draft offer document
with the Securities and Exchange Board of India, the market regulator.
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 o If SEBI demands any changes, they have to be made. Once the changes are
made, it is filed with the Registrar of Companies or the Stock Exchange. It
must be filed with SERI at least 21 days before the company files it with the
RoC/Stock Exchange. During this period, you can check it out on the SERI
Web site.
o Red Herring Prospectus is just like the above, except that it will have all the
information as a draft offer document, it will, however, not have the details of the price
or the number of shares be ing offered or the amount of issue. That is because the Red
Herring Prospectus is used in book building issues only, where the details of the final
price are known only after bidding is concluded.

Players:
 Co-managers and advisors
 Underwriters
 Lead managers
 B ankers
 Brokers and principal brokers
 Registrars
 Stock exchanges.

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Reference List

https://docs.google.com/forms/d/e/1FAIpQLSdi5TAs_HEsoo3YDxU92djQEbcKuasYgLzMgeivo
Q671ggjDQ/viewform   

http://www.openculture.com/business_free_courses

https://drive.google.com/drive/folders/1d_tOs7LT750UYW6dCGAll6xCJLyz6mrU?usp=sharing

https://drive.google.com/drive/folders/1GXhUjS0NM3o_gmCX8uQmebjaeo_iy7cU?usp=sharing

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