GROUP

PROJECT
TEAM PROJECT
1 Aviral
2 Gupta
Garv Tiwari
3 Chanchal
4 Patidar
Ira Kothari
5 Isha Bajaj
 INTRODUCTION
In merchant banking, issue management refers
to the process of managing the issuance of new
securities or financial instruments, such as
stocks, bonds, or other investment products, to
raise capital for a company. This includes a wide
range of activities and responsibilities aimed at
ensuring the smooth and successful launch of
the securities into the market
 KEY ASPECTS OF ISSUE
MANAGEMENT
• Planning the Issue: The merchant bank helps the company
determine the type of securities to issue (e.g., equity, debt), the
amount to be raised, the pricing, and the timing of the issue.
• Regulatory Compliance: The merchant bank ensures that the issue
complies with legal and regulatory requirements. This may involve
preparing and filing documents with the securities regulator (such as
a prospectus), adhering to listing requirements, and making
disclosures about the company’s financials.
• Marketing the Issue: This includes creating awareness among
potential investors and managing the communication around the
issue. The merchant bank may also assist in roadshows and
• Underwriting: In some cases, the merchant bank may
agree to underwrite the issue, meaning it guarantees the
sale of the securities to the public. If there is insufficient
demand, the bank buys the remaining securities itself
and then sells them.
• Pricing the Issue: The merchant bank helps set an
appropriate price for the securities to ensure the
company raises the desired capital while also being
attractive to investors.
• Distribution: The merchant bank organizes the
distribution of the securities to investors, either through a
 TYPES OF ISSUE
MANAGEMENT
1.Pre-Issue 2.Post-Issue
Management Management
1.Pre-issue management refers to the series of
activities and responsibilities that a merchant
bank undertakes before the actual issuance of
securities (such as stocks, bonds, or other
financial instruments) in the market. This phase
involves preparing for the issuance and ensuring
everything is in place to ensure a successful
 ACTIVITIES INVOLVED
1. Assessment and Advisory
• Company Evaluation: The merchant bank evaluates the company’s financial
health, market position, and growth prospects to determine the suitability of
an issue (whether it should be an equity or debt issue).
• Advisory Role: The merchant bank advises the company on the structure of
the issue, the best timing, and the type of securities to issue based on market
conditions and the company's needs. This could include advising on whether
to go for an IPO (Initial Public Offering), a rights issue, or a private placement.
2. Due Diligence
• Financial and Legal Checks: The merchant bank conducts thorough due
diligence to verify the company's financial status, legal standing, and
business operations. This includes reviewing financial statements, legal
contracts, and ensuring that all disclosures are accurate.
• Risk Analysis: They assess potential risks related to the issue, such as market
risks, operational risks, and legal risks, to ensure that investors are well-
3. Structuring the Issue
• Defining Issue Size and Pricing: The bank works with the company to
determine the size of the issue (how much capital to raise) and decides on
the pricing strategy, ensuring it is attractive to investors and aligned with
market conditions.
• Terms and Conditions: They help in setting the terms of the issue, such as
interest rates for debt instruments or price bands for equity instruments,
ensuring that these terms are competitive.
4. Regulatory Compliance and Documentation
• Drafting the Prospectus: The merchant bank assists in drafting the
prospectus (or offer document), which includes detailed information about
the company, the issue, and the risks involved. This is a legal requirement
for public offerings and is submitted to the regulatory authorities (e.g.,
Securities and Exchange Commission or stock exchanges).
• Compliance with Regulations: They ensure the issue complies with
5. Market Assessment
• Investor Sentiment and Demand: The merchant bank conducts market
research to gauge investor interest and sentiment toward the proposed
securities. This may involve surveys, feedback from institutional investors,
and studying market trends.
• Market Timing: The merchant bank analyzes market conditions to determine
the best time to launch the issue, ensuring that the market environment is
favorable for the offering.
6. Creating the Marketing and Promotion Strategy
• Roadshows and Presentations: The merchant bank organizes roadshows or
investor presentations to promote the issue and generate interest. During
these roadshows, the company’s management presents the details of the
offering to potential investors.
• Marketing Collaterals: They help prepare marketing materials, such as
presentations, press releases, and advertisements, to ensure that the
7. Underwriting (if applicable)
• In some cases, the merchant bank may also provide underwriting services.
This means the bank agrees to purchase the securities at a fixed price if
there is insufficient demand in the market, ensuring the company raises the
required capital.
8. Setting the Final Terms
• Final Pricing and Allocation: Based on market feedback, investor interest,
and due diligence, the merchant bank helps finalize the issue price, the
number of securities to be offered, and how they will be allocated to
investors.

In summary, pre-issue management involves a range of activities aimed at

preparing for the successful issuance of securities. The merchant bank's role is
crucial in ensuring that the issue is well-structured, legally compliant, marketed
effectively, and has the best chance of raising the desired capital from the
 POST ISSUE
MANAGEMENT
Post-issue management refers to the activities and
responsibilities undertaken by a merchant bank or
financial institution after the securities have been
issued and are trading in the market. The goal of
post-issue management is to ensure the smooth
functioning of the issued securities, maintain investor
confidence, and fulfill any ongoing regulatory or
compliance requirements
 ACTIVITIES INVOLVED
1. Stabilizing the Market Price
• Price Stabilization: After the securities are issued, their market price may
fluctuate. The merchant bank may engage in price stabilization activities to
support the price of the securities and prevent them from falling below the issue
price. This can involve buying back shares or bonds in the open market if
necessary (within the regulatory framework).
• Market Making: In some cases, the merchant bank may act as a market maker to
ensure liquidity, allowing investors to buy or sell the securities easily, which can
help maintain price stability.
2. Investor Communication and Relations
• Ongoing Investor Communication: The merchant bank ensures clear and
continuous communication with investors, keeping them informed about the
company’s performance, financial results, and any significant developments that
might impact the securities.
3. Regulatory Compliance and Reporting
• Regulatory Filings: The merchant bank ensures that all required post-issue filings
are made with regulatory authorities, such as the Securities and Exchange
Commission (SEC) or stock exchanges. This could include quarterly and annual
reports, disclosures, and any changes to the terms of the securities.
• Compliance with Listing Requirements: If the securities are listed on a stock
exchange, the merchant bank ensures that the company meets ongoing listing
requirements, such as disclosure obligations, corporate governance standards,
and other regulatory guidelines.
4. Handling Corporate Actions
• Dividend Payments and Interest: If the securities involve dividends (in the case of
equity) or interest payments (in the case of bonds), the merchant bank assists in
the proper execution of these payments to investors.
• Bonus Issues and Rights Offers: The bank may help the company execute corporate
actions like rights issues, bonus shares, or stock splits, which can affect the
securities post-issue. This involves communicating these actions to shareholders
and ensuring they are executed according to regulatory guidelines.
5. Monitoring the Performance of the Issue
• Tracking Market Performance: The merchant bank monitors how the securities
are performing in the market, including trading volumes, price movements, and
investor sentiment.
• Assessing Investor Feedback: Collecting and analyzing feedback from investors
to gauge their satisfaction with the issue and identify any areas of concern that
need to be addressed.
6. Handling Secondary Market Trading
• Liquidity Management: Ensuring that there is sufficient liquidity in the market for
the newly issued securities. This helps investors buy and sell the securities
easily, without significant price fluctuations.
• Maintaining Investor Confidence: The merchant bank works to maintain investor
confidence by ensuring that the company fulfills its post-issue obligations,
including good corporate governance, financial reporting, and strategic business
performance.
9. Ensuring Smooth Transfer of Shares
• Share Transfer and Registration: The bank may coordinate with registrars or other
intermediaries to ensure the smooth transfer of shares and accurate shareholder
records, making sure that investors’ holdings are properly recorded.
10. Closing the Issue and Transition to Market Trading
• Final Settlement: After the securities are issued, the merchant bank ensures that
all payments, settlements, and distributions are completed, and that the securities
are officially listed and begin trading on the exchange.
• Transition from Primary to Secondary Market: Once the securities are traded on the
secondary market, the merchant bank's role transitions from managing the issue
to ensuring liquidity and price stability in the market.

In summary, post-issue management ensures the effective handling of the securities

once they are in the market. The merchant bank’s role focuses on maintaining
investor confidence, ensuring compliance with regulatory requirements, stabilizing the
market price, and facilitating corporate actions like dividends or bonus shares. This
phase is crucial for the long-term success of the securities and the issuer’s
THANK
YOU