Investment Banking - Domestic Issue Management (Revised).pptx.pdf

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1. Domestic Issue Management
Faculty : Dr. Subhasish Roy Chowdhury

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What is an Issue Management?
▪Core business vertical in IB is the intermediary services wrt Issue Management of securities through
Initial Public Offers [IPO], Follow-up on Public Offers [FPO], Right Issue and Private Placements
▪“Issue” -> an offer of sale or purchase of securities by any body corporate …………through an Investment
Banker
▪“Issue Management” -> inter alia consist of preparation of prospectus and other information relating to the
issue, determining the financial structure, ties up of financiers and final settlement and refund of
subscriptions [SEBI – Merchant Bankers Regulations -1992]
▪“Issue Managers” -> issue manager in a public offer is a ‘Lead Manager’ . There may be a single LM
commensurate with the size of the offer. In case the size of the offer is large enough , there will be
Co-LMs along with the LM.

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Issue Offer Size requiring an Issue Manager for IPOs/FPOs/Right Issue
a)= Rs. 10 Crore 1
b)Less than Rs. 50 crores 2
c)Rs. 50 crores but less then Rs. 100 crores 3
d)Rs. 100 crores but less than Rs. 200 crores 4
e)Rs. 200 crores but less than Rs. 400 crores 5
f)Rs. 400 crores and above 5 or more

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Issue Managers
Issue Managers are required to mainly comply with the following requirements for registration:
▪Issue manager should be a corporate body, not being a Non-Banking Financial Company (as per
RBI).
▪He should have necessary infrastructure like adequate office space, equipments and manpower to
effectively discharge his activities.
▪He should have minimum two persons who have the experience to conduct the business of Merchant
Banking.
▪He should fulfill capital adequacy requirements i.e. should have a minimum net worth of Rs.5 crores.
▪He should have professional qualification from an institute recognized by government in Law,
Finance or Business Management.

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Going Public – Conceptual Framework
Conceptual framework is a visual tool that helps you analyze and get a comprehensive understanding. This analytical tool can be
used in different variations and contacts. It is commonly used to visually explain systems, relationships, concepts, and ideas in an
organized way.
❑IPO can be a source of finance if financing is specified as the end use
❑Creates a new ownership opportunity using on-market access through secondary market for public investors
❑Can be a liquidity event as it creates an exit-entry route for existing and future investors
❑Creates Market Capitalization
❑Being listed can activate hostile take overs attempts on the issuer
❑Bolstering and diversifying equity base.
❑Enabling cheaper access to capital.
❑Exposure, prestige and public image.
❑Attracting and retaining better management and employees through liquid equity participation.
❑Creating multiple financing opportunities: equity, convertible debt, cheaper bank loans, etc.

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Basic Steps for a Company venturing into an IPO in the Primary Market

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The Listing Dimensions – Consideration for an IPO
Moot Point -> ‘when does having a market listing make
sense to a corporation?’
Listing Decision = Strategic + Financial + Market factors / dimensions

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CONCEIVING
THE LAUNCH
OF AN IPO
THE IPO TRAJECTORY
PRE ISSUE
MANAGEMENT
POST ISSUE
MANAGEMEN
T

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CONCEIVING
LAUNCHING AN
IPO

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Selecting a Public Issue Proposal by An Investment Banker
Capital Market Position:
❑ pattern of their share price movement should be analysed
❑ trading behavior of shares of leading companies in the similar
field should be compared with the share quotations of the
group concern companies to see the stability in share
quotations.
Other Important Factors:
❑ outlook of the investors generally towards other companies
operating in similar industries which are already listed
❑ Investor’s response to previous Public Issues of similar
companies
❑ dividend payment schedule of the Company and its associate
concerns
❑ cost benefit analysis
Company Profile:
❑ track record of the company
❑ quality of its management, industry in which it operates
❑ product mix of the Company
❑ business prospects of the product proposed to manufacture
❑ profitability of the product and sustain ability of the project
❑ financial health also has to be gauged by probing the existing capital
structure, debt equity ratio, level of gearing, nature and extent of various
resources/provisions etc.
Project Profile:
❑ project is appraised by a Financial Institution
❑ whether there is participation of Institutions in the financing of project, if
any, and the level of financial participation
❑ appraisal and funding of project by an Institution also certifies the viability

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Strategic Dimension for considering an IPO
❑Corporations may prefer to remain Private if its business model allows it and there are no compelling reasons to go public -
examples of such stances are:
❑Maruti Udyog: once the largest privately held company with a net sale of Rs. 93 billion
❑Tata Sons: revenue of US$113 billion in 2019 hived off TCS into a separate company and made it public after remaining
private for decades
❑Bennett Coleman & Co. Ltd.: media baron of TOI Group still remain private
❑Reports published in Business Standard indicate Private companies generate higher RONW than their listed peers in India
❑Family-owned corporates may be conservative enough to go public. They don’t want outside shareholders to intervene into
their corporate matters which they had nurtured and brought up with due care
❑Multinational corporations don’t choose to go public due to the complex regulations in going public in their foreign jurisdictions
not commensurate with the counter benefits
❑Going public for a Government organisation is a decision of privatization and divestiture
❑Going public isn’t a rational step if business can be built on self equity from private wealth as well as debt fund

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Strategic Benefits for a private company to go public
❑Raising Capital
❑Gaining Higher Share Valuation
❑Funding for M&A Transactions
❑Reducing Corporate Debt
❑Maintaining Corporate Identity and Becoming better Known – better visibility – better
corporate image,
❑Attracting and Retaining Employees
❑Opens up a large retail window with immense potential of fund raising if it operates
well
❑Much better Corporate Governance

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Strategic Disadvantages for a
private company to go public
❑Time Commitment. ...
❑Distraction from Business and
Missed Opportunities
❑Cost of IPO – fees for underwriters,
consulting fees, times value of
money
❑Confidential information becomes
publicly available
Strategic Dimensions of going Public from
Private should be able to answer to the following
questions before deciding upon it
❑Does the corporation need the liquidity event for its existing investors or for
employees holding stock options? [Are there any possibilities of off market
exits or value unlocking options to push the IPO further into future?]
❑Has the company matured enough to unlock the value? [every company
need to unlock value by sharing its wealth eventually with a wider variety of
investors for a wider sustainable future growth]
❑Is the company’s business model retail oriented with strong brand presence
so as to identify with retail investors who would subscribe to the IPO?
❑Is the business of the corporation visible enough in the market which will
entail in unlocking value for its shareholders through listing?
❑Is the company confident enough about its strong financial growth in future to
sustain pressure of constant market validation after listing?

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Financial Dimension for considering and IPO
1
st.
aspect of Financial Dimension BUSINESS NATURE, SIZE & MARKET IMAGE
❑Capital intensive business-like heavy engineering, automobile, aircraft, oil refineries, pharma with a
mammoth business model may become inevitable to maintain balance in their capital structure – sooner
or later such corporations will have to go public in multiple rounds to fund their business process [so it is
more of a Financial than a Strategic decision]

❑Green Field projects of large corporations- IPO at its implementation stage itself though regulations
have been introduced to prevent risky IPOs – such IPOs are fundamentally possible for big players like
Reliance Petroleum which went public even before the project was implemented

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2
nd
. aspect of Financial DimensionWEIGH ABOUT VALUE UNLOCKING THRU’ IPO vs. ANY ALTERNATIVE OPTIONS AVAILABLE
❑Company may not go public if it has access to strong private equity investment with no
short-term exit compulsions.
Exceptions:
−BPCL: Disinvestment Ministry insisted about a strategic sale to a private investor for a higher value for privatization however, Petroleum
Ministry insisted on its public issue route.
−On 21 November 2019, the Government of India approved the privatization of Bharat Petroleum Corporation Limited (BPCL). The
government invited bids for the sale of its 52.98% stake in the company on 7 March 2020. The Government decided to consolidate the
businesses of BPCL before privatization starting with the Numaligarh Refinery Ltd. (NRL). The Government decided to keep Numaligarh
Refinery Ltd. (NRL) in the public sector, honouring the Assam Peace Accord. On Mar 2021, Bharat Petroleum Corporation Ltd (BPCL) sold
its entire 61.5% stake in Numaligarh Refinery in Assam to a consortium of Oil India Ltd. and Engineers India Ltd. and Government of
Assam for ₹9,876 crore. BPCL also acquired a 36.62% stake in Bharat Oman Refineries (BORL) or Bina refinery situated at Bina in Madhya
Pradesh, India from OQ (formerly known as Oman Oil Company), for ₹2,400 crore. BPCL has been holding 63.4 per cent and OQ 36.6 per
cent equity in the company. The Government of Madhya Pradesh has a minor stake in the company through compulsorily convertible
warrants. With the acquisition of OQ's entire stake in BORL, BPCL will establish control over BORL.

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−The Indian Government attempted to sell BPCL during fiscal year 2021–2022. However, the sale of BPCL has been pushed to fiscal year
2022–2023, and it has been reported that the Government is building a new strategy for the sale of the company. In addition to this, it has
also been reported that rising oil prices, along with increasing development and use of green energy, is leading to delays in the privatization
process.
−HPCL: Petroleum Ministry insisted about a strategic sale to a private investor
3
rd.
aspect of Financial Dimension HOW MUCH CAPITAL IS PROPOSED TO BE RAISED THRU’ IPO & IT’S DEPLOYMENT
❑well laid out investment plan and feasibility analysis sell better and convincingly
❑such an investment landscape depicts a higher ROI for investors
❑in case the capital requirement is too large for a business project causing too much dilution in
promoter’s shareholding ratio in which case size of the issue may be pruned down in case promoters
want to hold on to the management control
❑If the capital requirement is too small a project then it is advisable to avoid the IPO route and go for a
private equity funding of the project

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PRE ISSUE
MANAGEMENT

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1)Choosing type of Security Offer
Fixed Price Offer [FPO]
▪100% retail offer
▪Investors issue shares at a price stipulated by the company and announced beforehand through the offer document
▪Offer Price is determined based on market and economic forces to which the business is subjected to as well as inputs received from the
investment bankers
▪Investors does not have any role to play in the determination process of offer price
Book Built Offers [BBO]
▪Price of a security is determined based on eliciting / provoking its demand by the issuer company and discover the corresponding price of the security
▪There being a practical mechanism of discovering a price through market forces of demand and supply, the deficient possibility of over / under subscribing is
eradicated
▪However, there is always a ‘floor price’ / ‘price band’ below which the securities cannot be subscribed and sold
▪The main difference between FPO and BBO is the mechanism involved in the bidding activity and price discovery.
Qualified institutional placements (QIPS)
▪QIPS are investors who follow the rules and regulations governed by SEBI. As per SEBI, QIBs are institutional investors who possess the necessary expertise
and financial strength to carefully evaluate and invest in capital markets.
▪QIPs instead follow a looser set of regulations but where allottees are more highly regulated.
▪Qualified institutional buyers (QIBs) are the only entities allowed to purchase QIPs.

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Innovators Growth Platform [IGP]
▪“SEBI” had, in its circular dated December 12, 2018 reviewed the erstwhile framework for Institutional Trading
Platform (“ITP”) and proposed modifications to the existing guidelines of ITP including a change of name to
Innovators Growth Platform (“IGP”).
▪platform is meant for sophisticated and informed investors as indicated by the minimum trading lot size of INR
2,00,000 (Rupees Two Lakh Only).
▪Most of the PE/VCs which are active in the start-up ecosystem along with the individual investors/HNIs investing
directly/indirectly though angel networks will be eligible to invest in the securities listed on the IGP.

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2)Capital Structuring
▪ICDR Regulations prescribes following in determining the Capital Structure in the context of Public Issue:
−Proposed Issue Size: Promoter’s Contribution in the proposed issue if any + Subscriptions through the
offer document
−Offer through the Offer document: Reservations to the permitted reserved categories + NPO [Net
Public Offer]
*NPO: Net Public Offer made to Indian public excluding Promoter’s contribution
General Steps for Capital Structuring
▪Issue Size = total no. of new shares * Proposed pricing
▪Total post paid-up capital after the issue = Pre-issued capital + New no. of shares issued

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3)Minimum Public Shareholding
Minimum subscription refers to the minimum number of shares that a company needs to get out of the entire
issue by the date of closure. Currently, every company is required to raise 90% of the issues amount. Else, the
company is required to refund the complete amount that has been received. minimum subscription to be received
in an issue shall be not less than 90% of the offer through offer document except in case of an offer for sale of
specified securities.
❑In case of an IPO, the minimum subscription to be received shall be subject to allotment of minimum number of specified
securities, as prescribed in sub-clause (b) of clause (2) of rule 19 of the Securities Contracts (Regulation) Rules, 1957,
which stipulates that atleast twenty five per cent of each class or kind of equity shares or debentures convertible into
equity shares issued by the company was offered and allotted to public in terms of an offer document. In other words, the
issue is said have received minimum subscription in an IPO if it receives 90% of the offer through offer document and
25% of the post issue capital from the public.
❑In the event of non-receipt of minimum subscription, all application monies received shall be refunded to the applicants
forthwith, but not later than fifteen days from the closure of the issue.

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❑When an unlisted company makes a public issue, the promoters of the company must contribute at least 20% of the post-issue capital.
This capital must be locked in for at least three years , representing the freezing of such shares for that period. The remaining pre-issue
capital of the company must also be locked in for a period of one year from the date of listing.
❑When a listed company makes a public issue in the form of Further Public Offer or FPO, the promoters of the company must contribute at
least 20% of the post-issue capital or 20% of the total issue size. This requirement is in place to make sure that the promoters retain some
part of the company’s stakes once the company makes its public offer.
4)Minimum Promoter’s Contribution and Lock-In
5)Memorandum of Understanding
❑IB must invariably enter into a Memorandum of Understanding (MoU) with the company making the issue (issuer) clearly setting out their mutual
rights, liabilities and obligations relating to the issue.
❑The lead manager may adopt the draft and incorporate such clauses as may be considered necessary for defining his rights and obligations vis-à-vis
the issuer.
❑While doing so, it must be ensured that neither party should reserve for themselves any rights, which would have the effect of diminishing in any way
their liabilities and obligations under the Companies Act, 1956 and SEBI (Merchant Bankers) Rules and Regulations, 1992.
❑Lead manager who is responsible for drafting of the offer documents shall ensure that a copy of the MoU entered into with the issuer should also be
submitted to SEBI along with the offer document.

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▪After the contract for issue management is awarded, an appraisal note is prepared either in-house or is obtained from outside appraising agencies viz.,
Financial Institutions/ Banks etc.
▪The appraisal note thus prepared throws light on the proposed capital outlay on the project and the sources of funding it.
▪Project may be funded either by borrowing money from outside agencies or by injecting capital.
▪Optimum Capital Structure is determined considering the nature and size of the project. If the project is capital intensive, funding is generally biased in favour
of equity funding.
▪After the fund appraisal a meeting of Board of Directors of the Issuing Company is convened followed by an Extra Ordinary General Meeting (EGM) of its
members wherein various aspects related to issue of securities are decided.
6)Obtaining Appraisal Note
7)Appointment of Other Intermediaries
▪Lead manager should ensure that the requisite intermediaries, who are appointed, are registered with SEBI.
▪Lead manager should ensure that bankers to the issue are appointed in the mandatory collection centres. In case of public issues, there should be at least 30
mandatory collection centres which should invariably include the places where stock exchanges have been established
▪Agents so selected are properly equipped for the purpose, both in terms of infrastructure and manpower requirements.
▪While appointing Registrars to an Issue, lead manager should note that in respect of an issue in which he is the sole/one of the lead managers, he cannot act
as Registrar to the said issue.
▪Where the issuer of capital is a registered Registrar to an issue, the issuer will have to appoint an outside Registrar to process its issue.
▪Lead manager shall, ensure , the number of co-managers does not exceed the number of lead managers to the said issue and number of advisors is only one

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8)Inter-se Allocation of Responsibilities
Where an issue is managed by more than one lead manager, the responsibility of each lead manager shall be clearly delineated. In case of
under-subscription in an issue, the lead manager responsible for tying up underwriting arrangements will be held responsible for invoking
underwriting obligations and for ensuring that the underwriters pay the amount of development the Inter-se Allocation of responsibilities
accompanying the Due Diligence Certificate must specifically indicate the name of the lead manager responsible for this.
9)Preparing Prospectus
❑Lead manager should ensure proper disclosures to the investors, keeping in mind their responsibilities as per Merchant Bankers Rules and
Regulations.
❑Lead manager should, therefore, not only furnish adequate disclosures but also ensure due compliance with the Guidelines for Disclosure
and Investor Protection issued by SEBI which also specifies the contents of prospectus as well as application form.
❑The application form should contain necessary details and instructions to applicants to mention the:
−number of application form on the reverse of the instruments to avoid misuse of instruments submitted along with the applications for share/debentures in public issues.
−particulars relating to savings bank/current account number and the name of the bank with whom such account is held, to enable the Registrars to print the said details in the
refund orders after the names of the payees.
❑Suitable Instructions to investors in this behalf in the application form under the head “How to apply” should be incorporated.

28. Red Herring Prospectus
❑“Red Herring Prospectus” is a prospectus, which does not have details of either price or the amount of issue.
This means that in case price is not disclosed, the number of shares and the upper and lower price bands are
disclosed.
❑On the other hand, an issuer can state the issue size and the number of shares are determined later.
❑An RHP for an FPO can be filed with the ROC without the price band and the issuer, in such a case will
notify the floor price or a price band by way of an advertisement one day prior to the opening of the
issue.
❑In the case of book-built issues, it is a process of price discovery and the price cannot be determined
until the bidding process is completed. Hence, such details are not shown in the Red Herring prospectus
filed with ROC in terms of the provisions of the Companies Act, 2013.
❑Only on completion of the bidding process, the details of the final price are included in the offer
document. The offer document filed thereafter with ROC is called a prospectus.

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10)Submission of Draft Offer Documents
❑Lead Manager shall hand over not less than 25 copies of the draft offer document to SEBI and also to the Stock
Exchange(s) where the issue is proposed to be listed
❑Lead Manager shall submit to SEBI the Draft Prospectus in a soft copy - copies of the Draft Prospectus will be made
available by the Lead Managers/Stock Exchange to prospective investors
❑After a period of 21 days from the date the draft prospectus was made public, the Lead Manager shall file with SEBI a
statement giving a list of complaints received by it form SEBI and any amendment done in the document.
❑Every draft offer, document submitted to SEBI shall be accompanied by the undertakings/ certificates from company
or it’s specific officials like CEO , Company Secretary , Issuer
❑Certificate signed by the Company Secretary confirming (i) all refund orders against the previous issues have been
despatched to the applicants (ii) all shares/debenture certificates have been despatched ees (iii) the instrument(s) has been
listed on the Stock Exchanges mentioned in the offer documents.
❑In the case of public issue, an undertaking from the Lead Manager to get the issue fully underwritten to the extent of
offer to the public and to include details thereof in the final prospectus.

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11)Pricing of IPOs
IPO price is based on the valuation of the company using fundamental techniques. The most common technique used is discounted cash flow,
which is the net present value of the company's expected future cash flows. Underwriters and interested investors look at this value on a
per-share basis.
When a company goes IPO, it needs to list an initial value for its new shares. This is done by the underwriting banks that will market the deal. In
large part, the value of the company is established by the company's fundamentals and growth prospects. Because IPOs may be from relatively
newer companies, they may not yet have a proven track record of profitability. Instead, comparables may be used. However, supply and demand
for the IPO shares will also play a role on the days leading up to the IPO.
The Components of IPO Valuation
A successful IPO hinges on consumer demand for the company's shares. Strong demand for the company will lead to a higher stock price. In
addition to the demand for a company's shares, there are several other factors that determine an IPO valuation, including industry comparables,
growth prospects, and the story of a company.
Demand
Strong demand for a company's shares does not necessarily mean the company is more valuable. However, it does mean that the company will
have a higher valuation. An IPO valuation is the process by which an analyst determines the fair value of a company's shares.

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Two identical companies may have very different IPO valuations simply because of the timing of the IPO and market demand. A company will usually only undergo
an IPO when they determine that demand for their stocks is high.
In 2000, at the peak of the bubble, many technology companies had massive IPO valuations. Compared to companies that went public later, they received much
higher valuations, and consequently, were the recipients of much more investment capital. This was largely due to the fact that technology stocks were trending
and demand was especially high in the early 2000s; it was not necessarily a reflection of the superiority of these companies.
Industry Comparables
Industry comparables are another aspect of the process of IPO valuation. If the IPO candidate is in a field that has comparable publicly-traded companies, the IPO
valuation will include a comparison of the valuation multiples being assigned to its competitors. The rationale is that investors will be willing to pay a similar amount
for a new entrant into the industry as they are currently paying for existing companies.
Growth Prospects
An IPO valuation depends heavily on the company's future growth projections. The primary motive behind an IPO is to raise capital to fund further growth. The
successful sale of an IPO often depends on the company's projections and whether or not it can aggressively expand.
Industry Narrative
Not all of the factors that make up an IPO valuation are quantitative. A company's story can be as powerful as a company's revenue projections. A valuation
process may consider whether or not a company is offering a new product or a service that may revolutionize an industry or be on the cutting edge of a
new business model.
A good example of this is the companies that pioneered the Internet in the 1990s. Because they were promoting new and exciting technologies, some of them were
given valuations of multiple billions of dollars, despite the fact that they were not producing any revenue at the time.

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12)Launching of a Public Issue
❑Once the legal formalities and statutory permission for Issue of Capital are complete, the process of marketing the
Issue starts.
❑Lead Manager has to arrange for distribution of public issue stationery to various collecting banks, brokers, investors,
etc.
❑Public Issue is launched formally by conducting Press Conference, Brokers Meets, issuing advertisements in various
newspapers and mobilising Brokers and Sub- Brokers.
❑The announcement regarding opening of Issue in the newspapers is also required to be made by advertising in
newspapers 10 days before the Issue opens.
❑A certificate to the effect that the required contribution of the promoters has been raised before opening of the Issue
obtained from a Chartered Accountant is also required to be filed with SEBI.
❑During the currency of the Issue, collection figures are also obtained on daily basis from Bankers to the issue.
Another announcement through the newspapers is also made regarding the closure of the Issue.

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12)Marketing of the issue

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POST ISSUE
MANAGEMENT

35. 1.What is “ASBA”?
ASBA means “Application Supported by Blocked Amount”. ASBA is an application containing an
authorization to block the application money in the bank account, for subscribing to an issue. If an investor is
applying through ASBA, his application money shall be debited from the bank account only if his/her
application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.
2. Detailed procedure of applying in IPO through ASBA
Under ASBA facility, investors can apply in any public/ rights issues by using their bank account. Investor
submits the ASBA form (available at the designated branches of the banks acting as SCSB) after filling the
details like name of the applicant, PAN number, demat account number, bid quantity, bid price and other
relevant details, to their banking branch by giving an instruction to block the amount in their account. In turn,
the bank will upload the details of the application in the bidding platform. Investors shall ensure that the
details that are filled in the ASBA form are correct otherwise the form is liable to be rejected.
ASBA - “Application Supported by Blocked Amount”

36. 3. Who can apply through ASBA facility ?
1)In public issues w.e.f. May 1, 2010 all the investors can apply through ASBA.
2)In rights issues, all shareholders of the company as on record date are permitted to use ASBA for
making applications provided he/she/it is holding shares in dematerialized form and has applied for
entitlements or additional shares in the issue in dematerialised form
3)he/she/it has not renounced its entitlements in full or in part
4)he/she/it who is applying through blocking of funds in a bank account with the SCSB
4. Where can the investors get the ASBA forms for any issue ?
✔The investor can generate e-form from NSE website for any issue.
✔The same link is also available on BRLM’s (Book running lead manager) website also.
ASBA - “Application Supported by Blocked Amount”

37. 5. What advantage an investor has in applying through ASBA ?
Applying through ASBA facility has the following advantages:
▪The investor continues to earn interest on the application money as the same remains in the bank
account.
▪The investor does not have to bother about refunds, as in ASBA only that much money to the extent
required for allotment of securities, is taken from the bank account only when his application is selected
for allotment after the basis of allotment is finalized.

6. Is it mandatory to apply through ASBA only ?
It is mandatory for all public issues opening on or after January 01, 2016.
ASBA - “Application Supported by Blocked Amount”

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1)You may not be allotted shares
2)The shares may be overvalued
3)The listing day can be highly volatile
4)You may not have sufficient information about the company
5)Gut Calls – decisions without thorough analysis
6)Blind faith in the Promoters
7)Sector Bias
8)Herd Mentality
9)Short Term focus
10)Investment Dilemma – IPO is safe or not safe
Risk from the Investor’s angle

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Risk from the Company’s angle

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Tips to invest in an IPO
1)Watch your intentions
2)Do your homework
3)Risk Appetite
4)Set an entry and exit strategy
5)Monitor Post-IPO Performance
6)Consider Professional Advice
7)Check the accuracy of the Company’s Market Cap - compare that to peers listed in the market
8)If you don't have insider info prior to the IPO - forget to about it.
9)Lets the things run a few months/years and after if the asset find its bottom you can start thinking about
investing , if you don’t have the guts to gamble
10)Look at the aim of IPO. If prime aim is not related to expansion of business activities but to payment of
loans etc. then think about that.

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Possible Hurdles Faced by Corporates in Making an IPO
❑Extensive public disclosure requirements
❑Significant increase in capital and human resource costs
❑Pressures on management for reporting quarterly and annual financial results
❑More complex corporate governance structure and regulations
❑Stringent eligibility and compliance norms
❑Risk of takeover bids
❑Co-ordination between the intermediaries
❑To identify what risks and obligations are attached to the Company’s Contract and leases
❑Interests and expectations of the minority public investors must be taken into consideration
❑Pressure for short performance
❑Substantial investment in the IPO process.