About Public Issues

Corporates may raise capital in the primary market by way of an initial public offer, rights issue or private placement. An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. This Initial Public Offering can be made through the fixed price method, book building method or a combination of both. There are two types of Public Issues: ISSUE TYPE
Fixed Price Issues

OFFER PRICE
Price at which the securities are offered and would be allotted is made known in advance to the investors A 20 % price band is offered by the issuer within which investors are allowed to bid and the final price is determined by the issuer only after closure of the bidding.

DEMAND
Demand for the securities offered is known only after the closure of the issue Demand for the securities offered , and at various prices, is available on a real time basis on the BSE website during the bidding period..

PAYMENT

RESERVATIONS

100 % advance 50 % of the shares offered are reserved payment is for applications below Rs. 1 lakh and the required to be balance for higher amount applications. made by the investors at the time of application. 10 % advance 50 % of shares offered are reserved for payment is QIBS, 35 % for small investors and the required to be balance for all other investors. made by the QIBs along with the application, while other categories of investors have to pay 100 % advance along with the application.

Book Building Issues

More About Book Building Book Building is essentially a process used by companies raising capital through Public Offerings-both Initial Public Offers (IPOs) or Follow-on Public Offers ( FPOs) to aid price and demand discovery. It is a mechanism where, during the period for which the book for the offer is open, the bids are collected from investors at various prices, which are within the price band specified by the issuer. The process is directed towards both the institutional as well as the retail investors. The issue price is determined after the bid closure based on the demand generated in the process. The Process: The Issuer who is planning an offer nominates lead merchant banker(s) as 'book runners'. The Issuer specifies the number of securities to be issued and the price band for the bids. The Issuer also appoints syndicate members with whom orders are to be placed by the investors. The syndicate members input the orders into an 'electronic book'. This process is called 'bidding' and is similar to open auction. The book normally remains open for a period of 5 days. Bids have to be entered within the specified price band. Bids can be revised by the bidders before the book closes.

On the close of the book building period, the book runners evaluate the bids on the basis of the demand at various price levels. The book runners and the Issuer decide the final price at which the securities shall be issued. Generally, the number of shares are fixed, the issue size gets frozen based on the final price per share. Allocation of securities is made to the successful bidders. The rest get refund orders.

Guidelines for Book Building

Rules governing Book building are covered in Chapter XI of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000. BSE's Book Building System BSE offers a book building platform through the Book Building software that runs on the BSE Private network. This system is one of the largest electronic book building networks in the world, spanning over 350 Indian cities through over 7000 Trader Work Stations via leased lines, VSATs and Campus LANS. The software is operated by book-runners of the issue and by the syndicate members , for electronically placing the bids on line real-time for the entire bidding period. In order to provide transparency, the system provides visual graphs displaying price v/s quantity on the BSE website as well as all BSE terminals.

IPO - Pros and Cons

The going public process is an expensive consideration, and even more so for small cashstrapped young companies. When a company is contemplating the IPO process of going public, it must consider the pros and cons involved in making that decision, coached by its IPO advisors. Additionally, there are new responsibilities involved when a private company becomes a publicly traded business. Although many benefits can ensue from going public and the related IPO services, the company directors and principals must critically judge all the options and impending tasks of becoming a public company. The IPO process requires pertinent considerations that need be touched upon with the help of an experienced securities attorney; he can help your company evaluate the advantages and disadvantages of an Initial Public Offering (IPO). The following analysis is in order to help you make a decision that is best suited for your business. The Going Public process, what is it and is it right for your business? Once a private company becomes publicly traded, it will register securities so that it can make an offer and sell them to the investing public. This is the biggest difference in operational status of a private vs. public company: The public company can offer its stock to the public at large, whereas the closely held private company is restricted to private venues, such as friends and family members. This is a very important consideration since most companies that go public are interested in raising capital.

Furthermore, investment bankers and broker-dealers prefer to deal with a public company. A well ran private company with a healthy bottom line, quarter after quarter, is an excellent candidate to go public and attract outside investment capital. You can sell stock directly to investors. Private companies are very limited they can only raise money from a few people who are friends and family. However, if you file a registration statement with the SEC (Securities and Exchange Commission), and follow other guidelines, you can even advertise your offering and perhaps contract for the services of an IPO underwriter to sell your stock. Imagine being able to advertise online or on TV or radio. This allows you go public without having to depend on an Investment Bank. Yes, we can and will introduce you to sources of capital including our network of Investment Bankers and financial groups. Our IPO advisory services will allow your company to be able to compete with the big firms when trying to raise capital. IPO News: The Main Advantages of an Initial Public Offering (IPO) The increased capitalization for the issuing business is a strong point to consider, since a public offering creates a market value on a companys stock. Company directors and shareholder can retain their stock and use it for varied activities, such as: currency for mergers and acquisitions, as stock options to help retain key personnel, they may also sell their shares in the open market. Additionally, the business will have greater access to the capital markets for future capital inflow, guided by IPO advisors. In general terms, a companys valuation and debt-to-equity ratio will improve after going public, making it possible for the company to receive much better terms from lenders. Undertaking IPO services and offering securities to the investment public will help a companys management and directors retain a large degree of control. For example, if a private company decides to use the services of venture capitalists to raise capital, instead of going public, the VCs (Venture Capitalists) might insist on a decision-making position, such as a seat on the board of directors. When a company decides to raise capital via the going public process, those unpleasant considerations are avoided. No doubt the prestige related with becoming a public company has a definite appeal. The fact that its easier to promote a public company is also a pertinent consideration. Public companies have historically achieved higher recognition than private companies; hence, the public relations image and the perceived stability of being a public company is good IPO news and a plus. Are there Disadvantages to Going Public? Some of the typical expenses associated with taking a company public include fees for legal and accounting services. Of course the SEC (Securities and Exchange Commission) quarterly and yearly reporting requirements are a burden for most companies, if trading on the OTCBB, NASDAQ, etc

Is There an Easier, Better Way to Go Public? The easiest way for most companies to go public is to get listed on the Pink Sheets. Going public via the Pink Sheets is an excellent first step for smaller companies to become publicly traded entities. Here are some further advantages: There are no reporting requirements There is no business longevity requirement No Revenue or earnings requirement No minimum asset requirement

For a more in depth study of all going public processes, and to learn how to take a company public, please visit www.tcc5.com. The price to go public is usually $100,000 and the services are offered by the president of Tiber Creek, a going public services attorney in business since 1975.