Book building-b.v.raghunandan
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Transcript of Book building-b.v.raghunandan
Canara College,
Mangalore
September 22, 2014
Book-Building
A process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and built up and the price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice, circular, advertisement, document or information memoranda or offer document.
-SEBI (Disclosure & Investor Protection) Guidelines 2000
Features of Book-BuildingQuantity Assessment
Price Discovery
A 20% Price Band to Bid
QIB Portion (50%) and Public Issue Portion (35%)
Only Demat Account-Holders
10% Application Money by QIBs
100% by Others
Rationale for Book-Building
Institutional Investors
Legal Compulsion : Issue Exceeding 5 times the pre-issue networth
Bidding Choice for the Applicants
Shorter Process of Issue
Financial Intermediarie
sMerchant Banker as
Lead Book-Running Manager
Co-Book Runners
Syndicate Members
Registrar to the Issue
Bankers to the Issue
Merchant Banker As Book Runner
Facilitating Appointment of Other Book Runners
Facilitating Appointment of Syndicate Members
Circulation of Information Memorandum
Gathering the Input through IM
Filing Red Herring Prospectus with SEBI along with IM
Facilitating Appointment of other FIs
Filing Due Diligence Certificate with SEBI
Determination of Price Band
Opening & Closure of Subscription List
Allotment of Shares
Getting the Shares Listed
Filing Final Prospectus
Functions of Syndicate Members
Facilitating Quantity Assessment
Underwriting
Collection of Bid-cum-Application Forms
Functions of Registrar to the Issue
Appointment of Bankers
Printing & Supply of Forms
Allotment
Other Procedure
Issue Procedure
A. Quantity Assessment Stage
B. Pre-Issue Stage
C. Actual Issue Stage
D. Allotment Stage
Quantity Assessment Stage
Appointment of Financial Intermediaries
Preparation of Information Memorandum
Sending Information Memorandum
Determination of Quantity & Price-Band
Underwriting
Pre-Issue StageAppointment of Other Financial Intermediaries
Application to Stock Exchange
Preparation of Draft Red Herring Prospectus
Filing Documents with SEBI
Informing the Registrar of Companies
Agreement with Depositories
Appointment of an Ad Agency
Filing Final Red-Herring Prospectus
Despatch of Application Forms
Opening Escrow Accounts
1407987687538.pdf
Actual Issue Stage
Opening the Subscription List
Receipt of Application cum Bid Forms
Uploading the Information
Closure of Subscription List
Allotment by BRLM & R&T Agents
Allotment StageDetermining the Cut-
Off Price
Actual Allotment
Crediting Demat Accounts
Listing the Shares
Filing Final Prospectus
A Recent Instance of Book-Building-Snowman Logistics Limited Objects of the Issue: 1. Capital expenditure for setting up new temperature controlled
and ambient warehouses;2. Long term working capital; and3. General corporate purposes.
Issue Detail: »» Issue Open: Aug 26, 2014 - Aug 28, 2014
»» Issue Type: 100% Book Built Issue IPO »» Issue Size: 42,000,000 Equity Shares of Rs. 10 »» Issue Size: Rs. 197.40 Crore »» Face Value: Rs. 10 Per Equity Share »» Issue Price: Rs. 44 - Rs. 47 Per Equity Share »» Market Lot: 300 Shares »» Minimum Order Quantity: 300 Shares »» Listing At: BSE, NSE
Snowman Logistics IPO Grading: CRISIL Research has assigned a CRISIL IPO grade of '4/5‘ to the
proposed IPO of Snowman Logistics Ltd (Snowman).
Merits of Book-Building
Realisation of a High Price
Quick Issue Process
Fast Availability of Funds
Lesser Issue Expenses
Quick Update
Lack of Uncertainty
Quick Allotment
Opportunity for Revision
Quick Listing of Shares
Less Administrative Cost
Preference by Institutional Investors
Up-to-date Information
Demerits of Book-BuildingSuitable for Mega Issues
Compulsory Demat A/c
Networking of Stock Exchange with Subscription Terminals
Less Time for Subscription
Manipulation of Price
Less Access to Investors & Differential Application Money
Retail Investors Shy Away
Lesser Reservation to Retail Investors
Concentrated Holding
THANK YOU