Domestic Issue Management (Investment Banking)

Domestic Issue Management (Investment Banking)

1. Core Investment Banking Services Dr. Anu Thakur

2. Core Investment Banking Services Domestic Issue Management Underwriting Global Capital Market Offers Private Placements Private Equity Advisory Buy-backs and De-listings Corporate Restructuring Mergers and Amalgamations

3. Domestic Issue Management

4. Issue Management Issue = an offer of sale or purchase of securities by anybody corporate. Issue management = an activity which will consist of preparation of prospectus and other information relating to the issue, determining the financial structure, tie up of financiers and final allotment and refund of the subscriptions.

5. Eligibility for Issue Management Investment Banking = the regulatory framework is designed to ensure that they have sufficient competence and exercise diligence in their work. Keeping these objectives in mind, the SEBI has laid emphasis on ensuring that Investment Bankers should fulfil the eligibility criteria and merits for registration on an on-going basis. All Investment Bankers should have valid registration certificate under SEBI Rules, 1992 to perform the role of Investment Banking to issues.

6. Eligibility for Issue Management Investment bankers are also bound by the code of conduct and must comply with the general obligations and responsibilities. The activities that an Investment Banker is authorized to do are issue management, underwriting and associated activities such as advising or providing consultancy or marketing services for the issue.

7. Types of Issue requiring Issue Manager No stipulations by SEBI on the maximum number of Investment Bankers to be appointed. “Where there are more than one lead Investment banker to the issue, the responsibilities of each of such lead merchant banker shall clearly be defined and a statement specifying such responsibilities shall be furnished to the board at least one month before the opening of the issue for subscription.”

8. Considerations for an IPO Timing an IPO is a strategic, financial and investment banking decision. Strategic decision to make is to determine whether listing fits into company’s overall corporate philosophy and if so, whether the company is mature enough for it. Financial decision to make is to decide whether the company needs the capital proposed to be raised, how much and how effectively it should be raised. Investment banking decision – Investment Banker take a call on the IPO based - business plan, pricing, timing, marketing strategy and post-issue capital structure.

9. Strategic Considerations for FPO The pricing of the offer must be in line with the market performance of the share in the recent past. The choice of FPO as a means of finance for the company’s fund requirements needs to be properly assessed. The timing of the issue is also a significant factor that determines its size and pricing.

10. Strategic Considerations for Right Issue Is the primary objective of the right issue to raise funds or to reward shareholders? If the company proposes to raise fund while rewarding shareholders, a right issue is a better option. Availability of alternate sources of raising capital such as private placements. The prospects of the company and the proposed utilization of the funds in view the past track record of the company. The medium-term expectation of the company’s market performance considering that there would be a drop in the Market price for some time.

11. Regulatory Framework for Public Offers Public offers are regulated under the SEBI ICDR (Issue of Capital and Disclosure Requirements) Regulations – disclosures, investors protection, procedures and documentation. Allotment of shares, share capital, mis-statements in offer documents, etc. are governed by Companies Act, 2013. SCRA and LODR regulations ( Listing Obligations and Disclosure Requirements) for the purpose of listing and post-listing compliance for continued listing. The issue of shares to non-residents is governed by the Foreign Exchange Management Act (FEMA).

12. Important Stages in an IPO

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