Sunteți pe pagina 1din 3

2/5/2015

Stocks and Commodity Market


Operations (MBA 826)
Lecture 7 and 8
Pricing of Public Issues, Price and Price Bands
January 30, 2015
by
Vandana Srivastava

Pricing of Public Issues

issuer may determine the price of specified securities, the coupon rate, and the
conversion price of convertible debt instruments in consultation with

An IPO issuer may determine the face value of equity shares subject to the
provisions of:

the lead merchant banker or


through the book building process

Companies Act, 1956,


SEBI Act and Regulations

If the issue price per equity share is >= Rs. 500, the issuer shall have the option of
determining the face value at less than Rs.10 per equity share, subject to the
condition that the face value shall not be less than Rs. 1 per equity share.

2/5/2015

Eligibility for IPO


It has a minimum average pre-tax
operating profit of `15 crore (calculated on
a restated and consolidated basis) during
the three most profitable years out of the
immediately preceding five years.

The aggregate of the proposed


issue and all previous issues made
in the same financial year in terms
of issue size does not exceed five
times its pre-issue net worth as per
the audited balance sheet of the
preceding financial year.

It has a net worth of at least ` 1 crore


in each of the preceding three full
years.

It has net tangible assets of at least ` 3 crore in each of the preceding


three full years, of which not more than 50 percent is held in monetary
assets, provided that if more than 50 percent of the net tangible assets
are held in monetary assets, the issuer has made firm commitments to
deploy such excess monetary assets in its business/project. Provided
further that the limit of 50 percent on monetary assets shall not be
applicable in case the public offer is made entirely through an offer for
sale.

In case the company has changed its name within the last one
year, at least 50 percent of the revenue for the preceding one
full year was earned by the company from the activity
suggested by the new name.

Conditions for IPO


In case these conditions are not satisfied, an issuer can still
make an IPO by complying with the following guidelines:
The issuer may make an IPO if the issue is made through the
book-building process and if the issuer undertakes to allot at
least 75 percent of the net offer made to the public, to qualified
institutional buyers (QIBs) and to refund the full subscription
money if it fails to make the said minimum allotment to QIBs.

A company can make an IPO of convertible debt


instruments without making a prior public issue of its
equity shares and can list the same.
Pursuant to a public issue, no allotment can be made if the
number of prospective allottees is less than 1000
The issuer will not make an IPO if there are any outstanding
convertible securities or any other rights that would entitle
any person with any option to receive equity shares

2/5/2015

Credit Rating for IPO Debt Instruments


No public issue or rights issue of convertible debt instruments can
be made unless a credit rating of not less than investment grade is
obtained from at least one credit rating agency registered with the
SEBI, who are:

CRISIL Limited
-- Credit Analysis & Research Ltd. (CARE)
Fitch Ratings India Private Ltd.
-- ICRA Limited
Brickwork Ratings India Private Limited
Brickwork Ratings India Private Limited

if credit rating is obtained from more than one credit rating agency,
all the credit ratings (including the unaccepted credit ratings)
should be disclosed
All the credit ratings obtained in the three years preceding the
public or rights issue of debt instruments (including convertible
instruments) for any listed security of the issuer company should be
disclosed in the offer document.
http://www.sebi.gov.in/investor/addcra.html

S-ar putea să vă placă și