Sapm PPT 1
Sapm PPT 1
PORTFOLIO MANAGEMENT
UNIT 2
PRIMARY MARKET
2. Underwriting
In primary market, to ensure success of new issue, there is a
need for underwriting firms. The company needs to appoint
underwriters. They can be banks or financial institutions or
specialized underwriting firms.
Functions.,
3. Distribution
Investors:
Individual investors
Corporate investors [DLLS & FLLS]
(domestic institutional investors - DLLS)
(foreign institutional investors - FLLS)
Intermediaries
SEBI – REGULATOR:
Securities and Exchange Board of India (SEBI) is a statutory
regulatory body entrusted with the responsibility to regulate the
Indian capital markets.
It monitors and regulates the securities market and protects the
interests of the investors by enforcing certain rules and regulations.
It is mandatory for the issuer company coming with initial public offer
(IPO) to obtain IPO grading from a Credit rating Agency and disclose the
same on the cover of offer document and application form.
National securities depository limited and Central depository services limited are depositories
Stock exchanges:
Stock exchange provides a platform to trade company stock and other
securities.
A stock may be bought or sold only if it is listed on exchange.
The two major stock exchange in India are BSE & NSE regulated by
SEBI.
Stock brokers:
A stock broker is also called a registered representatives,
investment advisor or simply, broker is a professional
individual who executes buy and sell orders for stocks and
other securities through a stock market for a fee or
commission (brokerage).
Example for stock brokers:
Kotak securities
India bulls
India Infoline
TYPES OF ISSUES
IPO:
Initial Public Offer (IPO), is the first sale of shares by the privately
owned company to the public.
An initial public offering, or IPO, is an example of a primary market.
These trades provide an opportunity for investors to buy securities
from the bank that did the initial underwriting for a particular stock.
An IPO occurs when a private company issues stock to the public
for the first time.
Right Issue:
A rights offering (rights issue) is a group of rights offered to existing
shareholders to purchase additional stock shares, known as
subscription warrants, in proportion to their existing holdings.
Rights are often transferable, allowing the holder to sell them in the
open market
BONUS ISSUE
A bonus issue, also known as a scrip issue or a capitalization issue, is
an offer of free additional shares to existing shareholders.
A company may decide to distribute further shares as an alternative to
increasing the dividend payout.
For example, a company may give one bonus share for every five
shares held.
ESOP
An employee stock ownership plan (ESOP) is an employee benefit
plan that gives workers ownership interest in the company.
ESOPs give the sponsoring company, the selling shareholder, and
participants receive various tax benefits, making them qualified
plans.
Companies often use ESOPs as a corporate-finance strategy to
align the interests of their employees with those of their
shareholders.
IDR
Indian Depository Receipt (IDR) is a financial instrument
denominated in Indian Rupees in the form of a depository receipt.
The IDR is a specific Indian version of the similar global depository
receipts.
It is created by a Domestic Depository against the underlying
equity of issuing company to enable foreign companies to raise
funds from the Indian securities Markets.
ADR
An American depository receipt (ADR) is a negotiable certificate
issue by a U.S. bank representing a specified number of share in a
foreign (i.e. non U.S. stock that is trade on a U.S. exchange.
ADRs are denominated in U.S. dollars with the underlying security
held by a U.S. financial institution overseas.
Summary
Introduction of primary market – functions, advantages &
disadvantages.
Types of issues – IPO, right issue, bonus issue .. Etc.
Intermediaries
Investors
IDR & ADR.
Presented by – Team 4
Devamathi – 18BBA015
Gitanjali – 18BBAO20
Gobinath – 18BBA021
Gokulakrishna - 18 BBAO22
Kavya - 18BBAO26
Amrutha Chandran – 18BBA058
Rufsona Khatun – 18BBA061
THANK YOU