newissuemarket-090919095525-phpapp01

7/24/2019 newissuemarket-090919095525-phpapp01

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NEW ISSUE MARKETNEW ISSUE MARKET

ByBy Dr. B. Krishna ReddyDr. B. Krishna Reddy

Professor-SKIMProfessor-SKIM


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MEANING OF NEW

ISSUE MARKET I! refers !o !he se!-"# $hi%h hes !heind"s!ry !o raise !he f"nds 'y iss"in(differen! !y#es of se%"ri!ies.

These se%"ri!ies are iss"ed dire%!&y !o !hein)es!ors *'o!h indi)id"a&s as $e&& asins!i!"!iona&+ !hro"(h !he ,e%hanis, %a&&ed#ri,ary ,are! or ne$ iss"e ,are!.

The se%"ri!ies !ae 'ir!h in !his ,are!.


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FUNTIONS OF NEW

ISSUE MARKET The ,ain f"n%!ion of ne$ iss"e ,are! is!o fa%i&i!a!e !ransfer reso"r%es fro,sa)ers !o !he "sers.

I! #&ays an i,#or!an! ro&e in ,o'i&i/in( !hef"nds fro, !he sa)ers and !ransferrin(!he, !o !he 'orro$ers.

The ,ain f"n%!ion of ne$ iss"e ,are! %an'e di)ided in!o !hree ser)i%e f"n%!ions0


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on!d1.. 2. Ori(ina!ion0 I! refers !o !he $or ofin)es!i(a!ion3 ana&ysis and #ro%essin( ofne$ #ro4e%! #ro#osa&s. Ori(ina!ion s!ar!s'efore an iss"e is a%!"a&&y f&oa!ed in !he,are!. I! in%&"des a %aref"& s!"dy of !he!e%hni%a&3 e%ono,i% and finan%ia& )ia'i&i!y

!o ens"re !he so"ndness of !he #ro4e%!and #ro)ides ad)isory ser)i%es.


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on!d11 5. Under$ri!in(0 I! is an a(ree,en!$here'y !he "nder$ri!er #ro,ises !os"'s%ri'e !o a s#e%ified n",'er of sharesor de'en!"res in !he e)en! of #"'&i% no!s"'s%ri'in( !o !he iss"e. Th"s i! is a("aran!ee for !he ,are!a'i&i!y of shares.

Under$ri!ers ,ay 'e ins!i!"!iona& and non-ins!i!"!iona&.


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on!d11 6. Dis!ri'"!ion0 I! is !he f"n%!ion of

sa&e of se%"ri!ies !o "&!i,a!e

in)es!ors. Broers and a(en!s $ho,ain!ain re("&ar and dire%! %on!ra%!$i!h !he "&!i,a!e in)es!ors3 #erfor,

!his ser)i%e.


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MET7ODS OF F8OATING

NEW ISSUESThe )ario"s ,e!hods $hi%h are "sed in

!he f&oa!in( of se%"ri!ies in !he ne$

iss"e ,are! are0 P"'&i% iss"es Offer for sa&e

P&a%e,en! Ri(h! iss"es


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Offer of sa&e I! %onsis!s in o"!ri(h! sa&e of se%"ri!ies !hro"(h!he in!er,ediary of iss"e ho"ses or share 'roers.

I! %onsis!s of !$o s!a(es0 !he firs! s!a(e is adire%! sa&e 'y !he iss"in( %o,#any !o !he iss"eho"se and 'roers a! an a(reed #ri%e.

In !he se%ond s!a(e3 !he in!er,ediaries rese&& !hea'o)e se%"ri!ies !o !he "&!i,a!e in)es!ors. Theiss"e ho"ses #"r%hase !he se%"ri!ies a! ane(o!ia!ed #ri%e and rese&& a! a hi(her #ri%e. The

differen%e in !he #"r%hase and sa&e #ri%e is %a&&ed!"rn or s#read.


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Ri(h! Iss"e When a &is!ed %o,#any #ro#oses !o iss"ese%"ri!ies !o i!s e:is!in( shareho&ders3$hose na,es a##ear in !he re(is!er of

,e,'ers on re%ord da!e3 in !he #ro#or!ion!o !heir e:is!in( ho&din(3 !hro"(h an offerdo%",en!3 s"%h iss"es are %a&&ed ;Ri(h!Iss"e


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Pri)a!e #&a%e,en! I! in)o&)es sa&e of se%"ri!ies !o a &i,i!edn",'er of so#his!i%a!ed in)es!ors s"%h asfinan%ia& ins!i!"!ions3 ,"!"a& f"nds3)en!"re %a#i!a& f"nds3 'ans3 and so on.

I! refers !o sa&e of e="i!y or e="i!yre&a!ed ins!r",en!s of an "n&is!ed %o,#any

or sa&e of de'en!"res of a &is!ed or"n&is!ed %o,#any.


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Preferen!ia& Iss"e An iss"e of e="i!y 'y a &is!ed %o,#any !ose&e%!ed in)es!ors a! a #ri%e $hi%h ,ay or,ay no! 'e re&a!ed !o !he #re)ai&in(

,are! #ri%e is referred !o as #referen!ia&a&&o!,en! in !he Indian %a#i!a& ,are!.

In India #referen!ia& a&&o!,en! is (i)en,ain&y !o #ro,o!ers or friend&y in)es!ors

!o $ard off !he !hrea! of !aeo)er.


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E-IPOThe %o,#anies are no$ a&&o$ed !o iss"e%a#i!a& !o !he #"'&i% !hro"(h !he on-

&ine sys!e, of !he s!o% e:%han(es.For ,ain( s"%h on-&ine iss"es3 !he%o,#anies sho"&d %o,#&y $i!h !he#ro)isions %on!ained in ha#!er 22A

of SEBI* Dis%&os"re and In)es!orPro!e%!ion+ G"ide&ines3 5>>>.


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Green Shoe O#!ion I! deno!es ;an o#!ion of a&&o%a!in( shares ine:%ess of !he shares in%&"ded in !he #"'&i%iss"e


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Pri%in( of Iss"esThe %o,#anies e&i(i'&e !o ,ae #"'&i% iss"e%an free&y #ri%e !heir e="i!y shares or anyse%"ri!y %on)er!i'&e a! a &a!er da!e in!o

e="i!y shares as #er SEBI ("ide&ines 5>>>.The iss"er %an fi:-"# iss"e #ri%e in%ons"&!a!ion of $i!h ,er%han! 'aner3s"'4e%! !o (i)in( dis%&os"res of !he

#ara,e!ers $hi%h ha)e %onsidered $hi&ede%idin( !he iss"e #ri%e.


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Fi:ed Pri%e Pro%ess The #ri%e $hi%h has 'een fi:ed 'y !he %o,#anyfor i!s se%"ri!ies 'efore iss"e is 'ro"(h! !o !he,are!.

The #ri%e a! $hi%h !he se%"ri!ies areoffered9a&&o!!ed is no$n in ad)an%e !o !hein)es!or.

De,and for !he se%"ri!ies offered is no$n on&yaf!er !he %&os"re of !he iss"e.

Pay,en! is ,ade a! !he !i,e of s"'s%ri#!ion$hereas ref"nd is (i)en af!er a&&o!,en!.


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Boo-B"i&din(9Pri%e Band I! is a #ro%ess "sed for ,are!in( a #"'&i% offerof e="i!y shares of a %o,#any.

Boo '"i&din( is a #ro%ess $herein !he iss"e #ri%e

of a se%"ri!y is de!er,ined 'y !he de,and ands"##&y for%es in !he %a#i!a& ,are! The Pri%e a! $hi%h se%"ri!ies $i&& 'e a&&o!!ed is

no! no$n in ad)an%e !o !he in)es!or. On&y anindi%a!i)e #ri%e ran(e is no$n. *A&so %a&&ed #ri%e

'and and i! sho"&d no! 'e ,ore !han 5>@ of !hef&oor #ri%e+.


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8o%-in Period 8o%-in indi%a!es !he free/e on !ransfer ofshares. SEBI *Dis%&os"re and In)es!or Pro!e%!ion+G"ide&ines3 5>>> ha)e s!i#"&a!ed &o%-in

re="ire,en!s as !o s#e%ified #er%en!a(e ofshares s"'s%ri'ed 'y #ro,o!ers $i!h a )ie$ !oa)oid "ns%r"#"&o"s f&oa!in( of se%"ri!ies and !oens"re !he #ro,o!ers in)o&)ed in !he iss"e%on!in"e ha)e %on!ro&&in( a in!eres! in !he

%o,#any3 $hi%h %an 'e s"'4e%!ed !o &e(a&%o,#&ian%es.


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Offer Do%",en!s

An offer do%",en! ,eans ;#ros#e%!"s< in%ase of #"'&i% iss"e or an offer for sa&eand ;&e!!er of offer< in %ase of ri(h! iss"e3

$hi%h is re="ired !o 'e fi&ed $i!h !heRe(is!rar of o,#anies *RO+ and S!o%E:%han(es.

An offer do%",en! %o)ers a&& !he re&e)an!

infor,a!ion !o he an in)es!or in ,ain($ise in)es!,en! de%isions.


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Kinds of Offer Do%",en!s

2. Draf! Pros#e%!"s5. Draf! 8e!!er of Offer

6. Pros#e%!"s

. A'rid(ed Pros#e%!"s?. She&f Pros#e%!"s

. Infor,a!ion Me,orand",

C. Red-7errin( Pros#e%!"s


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8is!in( of Se%"ri!ies8is!in( ,eans ad,ission of !hese%"ri!ies !o dea&in(s on a re%o(ni/ed

s!o% e:%han(e. The se%"ri!ies ,ay'e of any #"'&i% &i,i!ed %o,#any3%en!ra& or s!a!e (o)ern,en!3 ="asi(o)ern,en!a& and o!her finan%ia&

ins!i!"!ions9%or#ora!ions3,"ni%i#a&i!ies e!%.


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O'4e%!i)es of 8is!in(

Pro)idin( &i="idi!y !o se%"ri!ies Mo'i&i/e sa)in(s for e%ono,i%de)e&o#,en!

Pro!e%! in!eres! of in)es!ors 'y ens"rin(f"&& dis%&os"res.

The e:%han(e has a se#ara!e 8is!in( De#!. !o(ran! a##ro)a& for &is!in( of se%"ri!ies of%o,#anies in a%%ordan%e $i!h !he )ario"s#ro)isions of !he %on%erned &a$s3

("ide&ines iss"ed 'y SEBI and r"&es3 'ye-&a$s and re("&a!ion of !he e:%han(e.


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Listed Securities:Se%"ri!ies !ha! are

&is!ed on )ario"s s!o% e:%han(es andhen%e e&i(i'&e for 'ein( !raded !here are%a&&ed &is!ed se%"ri!ies.

Depositories:A de#osi!ory is an ins!i!"!ion$hi%h de,a!eria&i/e #hysi%a& %er!ifi%a!esand effe%!s !ransfer of o$nershi# 'ye&e%!roni% 'oo en!ries. Presen!&y !here

are !$o de#osi!ories in India3 )i/. NSD8and SD8.


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Brokers:Broers are re(is!ered,e,'ers of !he s!o% e:%han(es!ho"(h $ho, in)es!ors !ransa%!.

Foreign Institutional Investors:Ins!i!"!iona& in)es!ors fro, a'road$ho are re(is!ered $i!h SEBI !oo#era!e in !he Indian a#i!a& ,are!are %a&&ed forei(n ins!i!"!iona&in)es!ors *FIIs+.


26/31

Merchant Bankers:Fir,s !ha! s#e%ia&i/ein ,ana(in( !he iss"e of se%"ri!ies are%a&&ed ,er%han! 'aners. They ha)e !o 'e

re(is!ered $i!h SEBI. Primar Dealers:A##oin!ed 'y !he RBI3

#ri,ary dea&ers ser)e as "nder$ri!ers in!he #ri,ary ,are! and as ,are! ,aers

in !he se%ondary ,are! for (o)ern,en!a&se%"ri!ies.


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Mutual Funds:A ,"!"a& f"nd is a)ehi%&e for %o&&e%!i)e in)es!,en!. I!#oo&s and ,ana(es !he f"nds ofin)es!ors.

!ustodians:A %"s!odian &oos af!er!he in)es!,en! 'a% offi%e of a,"!"a& f"nd. I! re%ei)es and de&i)ers

se%"ri!ies3 %o&&e%!s in%o,e3dis!ri'"!es di)idends3 and se(re(a!es!he asse!s 'e!$een s%he,es.


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Registrars:A&so no$n as a !ransfera(en!3 a re(is!rar is e,#&oyed 'y a%o,#any or a ,"!"a& f"nd !o hand&e a&&in)es!or-re&a!ed ser)i%es.

"nder#riters:An "nder$ri!er a(rees !os"'s%ri'e !o a (i)en n",'er of shares *orany o!her se%"ri!y+ in !he e)en! !he #"'&i%

s"'s%ri#!ion is inade="a!e. The"nder$ri!er3 in essen%e3 s!ands ("aran!eefor #"'&i% s"'s%ri#!ion.


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Bankers to an issue:The 'aners !oan iss"e %o&&e%! ,oney on 'eha&f of!he %o,#any fro, !he a##&i%an!s.

De$enture %rustees:Whende'en!"res are iss"ed 'y a %o,#any3a de'en!"re !r"s!ee has !o 'ea##oin!ed !o ens"re !ha! !he'orro$in( fir, f"&fi&&s i!s %on!ra%!"a&o'&i(a!ions.


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&enture !apital Funds:A )en!"re %a#i!a&f"nd is a #oo& of %a#i!a& $hi%h is essen!ia&&yin)es!ed in e="i!y shares or e="i!y-&inedins!r",en!s of "n&is!ed %o,#anies.

!redit Rating 'gencies:A %redi! ra!in(a(en%y assi(ns ra!in(s #ri,ari&y !o de'!se%"ri!ies. In India !here are !$o ,ain%redi! ra!in( a(en%ies redi! Ra!in(In)es!,en! Ser)i%es of India 8i,i!ed*RISI8+ and In)es!,en! Infor,a!ion andredi! Ra!in( A(en%y *IRA+.


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