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UT-3 Issue Management

The document outlines the process of Issue Management, which involves raising funds through public securities and requires registration with regulatory authorities like SEBI. It details the roles of intermediaries such as merchant bankers, underwriters, and registrars, as well as corporate restructuring types and motives. Additionally, it covers depository services, credit rating functions, advantages, and limitations.

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Jaanu Dachu
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21 views4 pages

UT-3 Issue Management

The document outlines the process of Issue Management, which involves raising funds through public securities and requires registration with regulatory authorities like SEBI. It details the roles of intermediaries such as merchant bankers, underwriters, and registrars, as well as corporate restructuring types and motives. Additionally, it covers depository services, credit rating functions, advantages, and limitations.

Uploaded by

Jaanu Dachu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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UT-3 Issue Management

Concept

Issue Management refers to the process of raising funds through the public by issuing
securities. It includes planning, coordinating, and executing activities related to public issues
like IPOs, FPOs, rights issues, etc.

Registration

A company must register its issue with regulatory authorities like SEBI (in India). It involves:

●​ Filing of offer documents​

●​ Approval from stock exchanges​

●​ Compliance with legal disclosures​

Role of Intermediaries

1.​ Merchant Bankers​

○​ Act as lead managers​

○​ Help with drafting offer documents​

○​ Liaise with SEBI and stock exchanges​

○​ Pricing and timing of issues​

2.​ Underwriters​

○​ Guarantee subscription of issue​

○​ Bear the risk if the issue is under-subscribed​

○​ Enhance investor confidence​

3.​ Bankers to the Issue​

○​ Handle application money​

○​ Accept payments from investors​


○​ Coordinate with registrars for refund/credit​

4.​ Registrars to the Issue​

○​ Process application forms​

○​ Maintain records of investors​

○​ Assist in share allotment and refunds​

Corporate Restructuring
Types

●​ Mergers & Acquisitions​

●​ Demerger/Spin-offs​

●​ Takeovers​

●​ Joint Ventures​

●​ Buybacks​

●​ Leveraged Buyouts​

Motives

●​ Improve operational efficiency​

●​ Synergy and economies of scale​

●​ Tax benefits​

●​ Diversification or focus​

●​ Exit strategy for promoters​


Depository Services
Constituents

●​ Depositories (e.g., NSDL, CDSL in India)​

●​ Depository Participants (DPs)​

●​ Beneficial Owners (Investors)​

●​ Issuers​

Functions

●​ Dematerialization and rematerialization​

●​ Transfer and settlement of securities​

●​ Pledging and hypothecation​

●​ Corporate actions (dividends, rights, bonuses)​

Credit Rating Services


Functions

●​ Assess creditworthiness of issuers/debt instruments​

●​ Provide independent risk assessment to investors​

●​ Aid pricing of securities​

Process

1.​ Request for rating​

2.​ Data collection and analysis​

3.​ Interaction with management​

4.​ Rating committee decision​


5.​ Monitoring and surveillance​

Symbols (Indicative – vary by agency)

●​ AAA – Highest safety​

●​ AA/A – High to adequate safety​

●​ BBB – Moderate safety​

●​ BB and below – High risk​

Advantages

●​ Helps investors assess risk​

●​ Lowers cost of capital for issuers​

●​ Enhances transparency and trust​

●​ Facilitates informed decision-making​

Limitations

●​ Ratings are opinions, not guarantees​

●​ May lag behind real-time performance​

●​ Conflict of interest if paid by issuers​

●​ Can be influenced by external events​

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