New Issue market deals with new
securities that are offered to the
investing public for the first time.
IPO- Market where firms go to the public
for the first time through initial public
offering.
SEO- Market where firms which are
already trading raise additional capital
through seasoned equity offering.
Deals with new Ready market for
securities. trading old
securities.
Have physical setup
No tangible form and are located in
nor any particular
administrative geographical areas.
organisational set
up. Provides liquidity to
Provides the the co. as well as to
issuing co. with the investors.
funds.
The cos. which make new issue apply for
listing of shares on a recognized stock
exchange.
The new issues first placed in the NIM
can be disposed off subsequently in the
stock exchange.
Both the markets are susceptible to the
changes in the macro-environment
conditions.
NIM and stock market are economically
an integral part of industrial securities
market.
Origination
Underwriting
Distribution
A careful study of market, technical and
financial viability of a project.
Advisory services-
1. Type of issue
2. Magnitude of issue
3. Time of floating an issue
4. Pricing of an issue
5. Methods of issue
It is an agreement whereby the
underwriter promises to subscribe to a
specified no. of shares or debentures or
a specified amount of stock in the event
of public not subscribing to the issue.
Institutional underwriters- LIC, UTI, IDBI,
ICICI,GIC and commercial banks.
Non-institutional underwriters- Brokers.
Standing behind the issue
Outright purchase
Consortium method
Assured of raising adequate capital
Relieved from the risk of finding buyers
Assured of getting minimum
subscription within the stipulated time.
Expert advice
Public confidence
Sale of securities to ultimate investors.
Performed by brokers and agents.
Public issues
Offer for sale
Private placement
Rights issues
The issuing co. directly offers to the
general public/institutions a fixed no. of
shares at a stated price through a
document called prospectus.
Large section of the investing public
through advertisement.
No intermediaries.
Avoid concentration of wealth in few
hands.
Expensive method.
Suitable only for large issues.
Name of the company.
Address of the registered office of the
company
Existing and proposed activities
Location of the industry
Names of directors
Authorised and proposed issue capital to the
capital
Dates of opening and closing the subscription
list
Minimum subscription
Names of brokers/ underwriters/ bankers/
managers and registrars to the issue
A statement by the co. that it will apply to
stock exchange for quotations of its shares.
Consists in outright sale of securities
through the intermediary of issue
houses or share brokers
First stage- Direct sale to the issue
house and brokers
Second stage- Intermediaries resell the
above securities to the ultimate
investors
The difference in the purchase and
selling price is called turn or spread.
Offer by a foreign co. of a part of it to
Indian investors.
Promoters diluting their stake to comply
with requirements of stock exchange at
the time listing of shares.
The securities issue (users of funds) seeks
to find an institutional buyers such as
pension fund or group of buyers (suppliers
of funds) to purchase the whole issue.
Issue houses buy the securities outright
with the intention of placing them with
their clients afterwards.
Reliance Industries raised Rs.945 crores
with three FIs of whom UTI was important.
Konkan Railway Corp. placed tax free
bonds worth Rs. 70 crores with banks and
Fis.
In a depressed market condition
Suitable for small cos. and first
generation entrepreneurs
Avoids delays and expenses involved in
public issue.
Available to unlisted cos.
Majority holding of securities with few
institutions.
Offered to the existing shareholders in a
particular proportion to their existing
share ownership.
A right means an option to buy certain
securities at a certain privileged price
within a certain specified period
The rights are transferable and saleable
in the market.
Merchant banker/ lead manager
Underwriters
Bankers to issue
Brokers to an issue
Registrar to issue and share transfer
agent
Debenture trustees
Portfolio managers
Any person who is engaged in the
business of issue management either by
making arrangements regarding selling,
buying or subscribing to securities or
acting as manager/consultant/ advisors
or rendering corporate advisory service
in relation to issue management.
Make a commitment to get the issue
subscribed either by others or by
themselves.
Engaged in activities such as
acceptance of applications along with
application money from the investors in
respect of issues of capital and refund of
application money.
Concerned with the procurement of
subscription to the issue from the
prospective investors.
Collects application from the investors,
keeps a proper record of applications
and money received from investors or
paid to the seller of securities and
assists companies in determining the
basis of allotment of securities in
consultation with stock exchanges,
finalizes the allotment of securities and
processing/ dispatching allotment
letters, refund orders, certificates and
other related documents in respect of
issues of capital.
Maintain the records of holders of
securities on behalf of companies, and
deal with all matters connected with the
transfer/ redemption of its securities.
Trustee for a trust deed needed for
securing any issue of debentures by a
company/body corporate or any private
placement of debentures by a listed/
proposed to be listed company.
Persons who advise/ direct/ undertake,
on behalf of the clients, whether
discretionary portfolio manager or
otherwise, the management/
administration of portfolio of securities/
funds of clients.
