Date post: | 09-Apr-2018 |
Category: |
Documents |
Upload: | mitesh-shah |
View: | 216 times |
Download: | 0 times |
of 50
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
1/58
Study Circle meet by WIRCStudy Circle meet by WIRC
on 18on 18thth July 2010July 2010
at Bhavans Collegeat Bhavans College
PresentationPresentation byby
CS B NarasimhanCS B Narasimhan
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
2/58
GOA CONCLAVE ( ICDR AND IPOGOA CONCLAVE ( ICDR AND IPO
NEW PROCESS )NEW PROCESS )DIP VS ICDRDIP VS ICDR
IPO NEW PROCESSIPO NEW PROCESS
UNDERWRITING IN IPOUNDERWRITING IN IPO
IPO GRADING (THE FLIP SIDE)IPO GRADING (THE FLIP SIDE)
Basis of AllotmentBasis of Allotment
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
3/58
BROAD BASIS FOR THE CHANGESBROAD BASIS FOR THE CHANGES
DIP guidelines standsDIP guidelines stands rescinded ( Augrescinded ( Aug2009)2009)
Broadly theBroadly the framework remains theframework remains thesamesame
Some moreSome more clarification providedclarification provided in thein thenew Regulationsnew Regulations
Guidelines does not have theGuidelines does not have the force of lawforce of law
Regulations doesRegulations doesEnforcementEnforcement to be more strictto be more strict
Unwanted guidelines deletedUnwanted guidelines deleted from thefrom thenew regulationsnew regulations
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
4/58
Group Companies & Eligibility normsGroup Companies & Eligibility norms
The term "groupThe term "groupcompanies" notcompanies" notexplained.explained.
Exemptions wereExemptions wereavailable toavailable to
bankingbankingcompany, andcompany, andinfrastructureinfrastructurecompany.company.
The termThe term "group"groupcompaniescompanies""explained to avoidexplained to avoidconfusion. The newconfusion. The newnorms alsonorms also bans firmbans firmallotmentallotment totoprivileged peopleprivileged peoplelike relatives,like relatives,associates andassociates andfriends in IPOs.friends in IPOs.Exemption has beenExemption has been
removed.removed.Eligibility normsEligibility normshave been madehave been madeapplicable uniformlyapplicable uniformlyto all types ofto all types ofissuers.issuers.
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
5/58
Definition ofEmployeeDefinition ofEmployee
DefinitionDefinitionof "employee"of "employee"
IncludesIncludespermanentpermanent
employee/employee/director ofdirector ofsubsidiary orsubsidiary orholdingholdingcompany of thecompany of the
issuer.issuer. (DIP(DIPGuidelines)Guidelines)
ExcludesExcludes permanentpermanentemployee/ director ofemployee/ director ofsubsidiary or holdingsubsidiary or holdingcompany of the issuercompany of the issuer andandpromoters and immediatepromoters and immediate
relatives of promoters.relatives of promoters.employee means aemployee means apermanent and fullpermanent and full--timetimeemployeeemployee of the issuer,of the issuer,working in India or abroadworking in India or abroad
or a director of the issuer,or a director of the issuer,whether whole time or partwhether whole time or parttimetime
Reservations to employeesReservations to employeeswillwill not be subjectnot be subject to lockto lock--
in.in.
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
6/58
Key managerial person and AnchorKey managerial person and Anchor
InvestorInvestorDefinition ofDefinition of"Key"KeyManagementManagementPersonnel"Personnel"
Definition ofDefinition ofAnchorAnchor
InvestorInvestor(AI)(AI)
Officers vested withOfficers vested withexecutive powersexecutive powers and theand theofficers at theofficers at the levellevelimmediately below theimmediately below theboard of directorsboard of directors of theof the
issuer and includesissuer and includes any otherany otherpersonperson whom the issuer maywhom the issuer maydeclare as a key managementdeclare as a key managementpersonnel.personnel.
anchor investor"anchor investor" (AI)(AI)means a qualified institutionalmeans a qualified institutionalbuyerbuyer
Concept of AI notified by SEBIConcept of AI notified by SEBIon 9on 9thth July 2009July 2009
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
7/58
Public IssuesPublic Issues
Firm allotmentFirm allotmentin public issuesin public issueswas permitted.was permitted.
BookBookbuildingbuildingprocess couldprocess couldbe madebe madethrough 75%through 75%or 100% ofor 100% ofissue size.issue size.
There isThere is no provisionno provisionfor firm allotmentfor firm allotment ininpublic issues. This haspublic issues. This hasbeen done away sincebeen done away since
there is athere is a separateseparatewindow for AI andwindow for AI andalso for QIPsalso for QIPs nownow
75% book building75% book buildingroute has beenroute has been
omitted.omitted.
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
8/58
Public IssuesPublic IssuesThe allotment andThe allotment and/or refund period/or refund periodwas 30 days forwas 30 days forfixed price issuesfixed price issuesand 15 days forand 15 days for
book built issues.book built issues.
Disclosure of priceDisclosure of priceor price band wasor price band was
required in draftrequired in draftprospectus in caseprospectus in caseof fixed priceof fixed pricepublic issues.public issues.
The allotment/refundThe allotment/refundperiod has been madeperiod has been made15 days for both fixed15 days for both fixedprice and book builtprice and book builtissuesissues (( PossiblyPossiblykeeping SMEs in mindkeeping SMEs in mind))
For Book Built issuesFor Book Built issuesprice band / Floor priceprice band / Floor priceneeds to beneeds to be announcedannounced
2 days2 days before issuebefore issueopening and foropening and for FixedFixedprice at the time of ROCprice at the time of ROCfilingfiling
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
9/58
Public IssuesPublic IssuesSurplus money inSurplus money in
Green ShoeGreen ShoeOption (GSO) BankOption (GSO) BankAccount was requiredAccount was requiredto be transferred toto be transferred tothe investorthe investor
Protection Fund ofProtection Fund ofstock exchangesstock exchanges
Issue period forIssue period forInfrastructureInfrastructure
companies incompanies inpublic issues was 21public issues was 21days, as against 10days, as against 10
days for other issues.days for other issues.
Surplus money wouldSurplus money would
now be transferred tonow be transferred tothethe InvestorInvestorProtection andProtection andEducation Fund (IPEF)Education Fund (IPEF)established by theestablished by theBoardBoard
The issue period hasThe issue period hasbeen madebeen made uniform touniform to10 days for all types10 days for all typesof issuersof issuers. The need. The need
to give more time forto give more time forthis sector wasthis sector wasdispensed withdispensed with sincesincemoney comes only onmoney comes only onthe last daythe last day
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
10/58
Public IssuesPublic IssuesParticulars as perParticulars as peraudited financialaudited financialstatements wouldstatements wouldnot be more than 6not be more than 6months old from themonths old from theissue opening dateissue opening datefor all issuers,for all issuers,
except Governmentexcept GovernmentCompanies.Companies.Disclosure onDisclosure onpledge of shares bypledge of shares bypromoterspromoters
Financial institutionFinancial institutionas a monitoringas a monitoringagencyagency not definednot definedbeforebefore
Both the GovernmentBoth the Governmentand nonand non--governmentgovernmentissuers would now beissuers would now betreated at par.treated at par.
The New RegulationsThe New Regulationsprovides forprovides for DisclosureDisclosure
on pledge of shares byon pledge of shares bypromoterspromoters consequentconsequentto amendment in theto amendment in thelisting agreementlisting agreementReplaced byReplaced by "public"public
financial institution or afinancial institution or ascheduled commercialscheduled commercialbank"bank" who would bewho would beacting as monitoringacting as monitoringagency.agency.
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
11/58
Book Building IssueBook Building IssueIf issue opening andIf issue opening and
closingclosingadvertisementadvertisementcontained highlights,contained highlights,then thethen theadvertisement wouldadvertisement wouldcontain risk factors.contain risk factors.
Forfeiture ofForfeiture ofmoney onmoney on
unexercisedunexercisedwarrants inwarrants inpreferential issuespreferential issues
If advertisementIf advertisement
contains informationcontains informationother than the detailsother than the detailsspecified in the format,specified in the format,the advertisementthe advertisementshall contain riskshall contain riskfactors.factors.
Where the warrantWhere the warrantholder exercisesholder exercises hishisoption to convert onlyoption to convert onlysome of the warrantssome of the warrants
held by him, upfrontheld by him, upfrontpayment made againstpayment made againstonly such warrants canonly such warrants canbe adjusted.be adjusted. BalanceBalancewill stand forfeitedwill stand forfeited
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
12/58
Book Building IssuesBook Building IssuesMinimumMinimum
promoters'promoters'contributioncontributionbrought in bybrought in bypromoters/ personspromoters/ personsbelonging tobelonging to
promoterpromotergroup/friends,group/friends,relatives andrelatives andassociatesassociates
Issue period wasIssue period wasnot clearnot clear in case ofin case ofrevisionrevision in pricein priceband in book builtband in book builtpublic issues.public issues.
PromotersPromoters
contributioncontribution shall beshall bebrought in only bybrought in only bypromoters whosepromoters whoseidentity, photograph,identity, photograph,etc areetc are disclosed indisclosed in
the offer document.the offer document.
The New RegulationsThe New Regulationsprovide thatprovide that totaltotalissue period shall notissue period shall not
exceed 10 days,exceed 10 days,including anyincluding anyrevision in pricerevision in price
band.band.
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
13/58
Monetary ControlMonetary ControlPrePre--issueissue
advertisement to beadvertisement to bemademade immediatelyimmediatelyafter receipt ofafter receipt ofobservationsobservations from thefrom the
BoardBoard
Documents such as MDocuments such as Mof A and A of A of theof A and A of A of theCompany, auditedCompany, auditedbalance sheet to bebalance sheet to beattached with dueattached with duediligence certificate.diligence certificate.
PrePre--issueissueadvertisementadvertisementwould be madewould be made afterafterregistering ofregistering ofProspectus / redProspectus / red
herring prospectusherring prospectuswith Registrar ofwith Registrar ofCompanies butCompanies butbeforebefore opening ofopening of
the issue.the issue.
The NewThe NewRegulations requireRegulations requirefor attachment offor attachment of
checklist onlychecklist only..
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
14/58
Other HighlightsOther HighlightsFor follow on publicFor follow on public
offers (FPO)offers (FPO) the noticethe noticeof Board meeting hadof Board meeting hadto be given as perto be given as perclause 19 of the listingclause 19 of the listingagreement aagreement a weekweekbefore the boardbefore the boardmeeting.meeting.
The underwritingThe underwritingobligations will be forobligations will be forthe entire amountthe entire amount
Since the price band isSince the price band is
required to be announcedrequired to be announcedone day before the issueone day before the issueopening notice period toopening notice period toStock Exchange for theStock Exchange for theBoard meeting to be heldBoard meeting to be heldfor this purpose has beenfor this purpose has been
reduced to 48 hoursreduced to 48 hours
UnderwritingUnderwritingobligationsobligations will not bewill not berestricted to therestricted to the
minimum subscriptionminimum subscriptionamount of 90% of theamount of 90% of theissue size butissue size but forfor100% of the issue100% of the issuesize.size.
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
15/58
Stock Exchanges and PublicStock Exchanges and Public
RepresentativeRepresentativeStock Exchanges wouldStock Exchanges wouldbe required to disclosebe required to disclosecomplaints lodged bycomplaints lodged byinvestors against tradinginvestors against tradingmembers and companiesmembers and companies
listed on the exchange inlisted on the exchange intheir websitetheir website
Where there isWhere there isdrawal of lots it hasdrawal of lots it hasto be done in theto be done in the
presence of the PRpresence of the PRfrom the governingfrom the governingBoard of the StockBoard of the StockExchangeExchange
These disclosuresThese disclosureswill also includewill also includedetails pertaining todetails pertaining toarbitration penalarbitration penalaction etc againstaction etc against
trading members.trading members.
TheThe reference to PRreference to PRhas been omittedhas been omittedfrom ICDR. It hasfrom ICDR. It hasbeen clarified bybeen clarified bySEBI that it isSEBI that it isintentional.intentional.
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
16/58
Debarment and offer for saleDebarment and offer for sale
CompaniesCompaniesprohibitedprohibited ififdebarred fromdebarred fromaccessing Capitalaccessing CapitalMarketMarket Order orOrder or
Direction by BoardDirection by Board
No provision forNo provision foroffer for sale byoffer for sale by
listed entitieslisted entities
TheThe Issuer, any of itsIssuer, any of its
promoters, directors orpromoters, directors orpersons in control arepersons in control aredebarreddebarred
O F S Provided forO F S Provided for..
Promoters with majorityPromoters with majorityshareholding in listedshareholding in listedentities can do offer forentities can do offer forsale.sale. DisinvestmentDisinvestmentand increasing in publicand increasing in public
holding to 25%holding to 25%
Provisions relating toProvisions relating toOTCEI, EOTCEI, E--IPO OmittedIPO Omitted
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
17/58
Post Issue Monitoring reportPost Issue Monitoring report
3 day report3 day report(working days(working daysfrom the closurefrom the closureof the issue)of the issue)
FinalFinal 50 days50 dayspost issuepost issuemonitoringmonitoringreport (50report (50
calendar dayscalendar daysfrom closure offrom closure ofthe issue)the issue)
3 Day report3 Day report ((calendar days).calendar days).
15 days within15 days withinfifteen daysfifteen days
of the date ofof the date offinalizationfinalization of basisof basisof allotment or withinof allotment or withinfifteen days of refundfifteen days of refundof money incase ofof money incase offailure of issue, fromfailure of issue, fromclosure.closure.
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
18/58
Other changes notified later 9Other changes notified later 9thth
Nov 2009Nov 2009Reservation forReservation forEmployeesEmployees
Upto 5 % of the issue sizeUpto 5 % of the issue size
Ceiling of Rs 1 LakhCeiling of Rs 1 Lakh
Extend reservation forExtend reservation forRights Issue alsoRights Issue also
Discount for EmployeesDiscount for Employeesalsoalso
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
19/58
19
New process
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
20/58
20
New process 14th August 2003
Notification dated 14th August 2003
Visualized electronic IPO with secondary
market settlement
Process involved limited KYC by SM
Elimination of paper work
Elimination of duplication of effort
Seamless process of allotment and listing
Trading to commence on (T+6)
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
21/58
21
New process 14th August 2003
Market participants objection (BRLMand SM)
This portion ofnotification shelved
ONGC Fiasco 29th March 2004
SMILE committee recommendations
GRIP (ASBA process)
ASBA phase IandPhase II
Lukewarm response (cannot be made compulsory .
Provisions of the Companies Act )
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
22/58
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
23/58
23
Post issue activities
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
24/58
24
Book building Post issue activities
Pricing based ondemand (Bids)
Finalizationof prospectus
Filing with SEBIand ROC
Collectionof biddata
Non ASBA & ASBA
Cleaning and validation of biddata
DPID BenIDandPAN matched withDepository database
Invalid cases submitted to BRLM/SM& Sub SM (1 day window for
rectification)
Final book takenafter rectification from both SE
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
25/58
25
Submission of base documents to SE
SM to senddataand bids to EB (T+2)
RTI to give data file to EB to facilitate validation of
bids
Cheques to be cleared by EB (T+4)
Bids and bank schedule from EB to RTI
Technical rejections
RTI to obtain soft copy of schedule (T+4)and FC
from EB (T+6)
Book building Post issue activities
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
26/58
26
Recon. of electronic book with schedule and FC (gross
level)
Biddednot banked
Bankednot bidded
Technical rejections
Invalid bids ( not matched cases)
Amount mismatch (treatment thereof)
PAN mismatch and multiple applications
Book building Post issue activities
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
27/58
27
Preparationand submission of basis to DSE
Approval of basis by DSE (T+8)
Apply the basis ondataand give instructions for
transfer of funds to EB (T+8)
Similar exercise for ASBA bids (T+8)
Lock-in of pre issue capital (T+8)
Fund transfer confirmation by EB (T+9)
RTI to upload file for credit of shares (T+9)
Book building Post issue activities
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
28/58
28
Confirmation from Depository for lock-in (T+9)
Filing ofdistribution schedule etc with SE (T+10)
Completion ofall formalities for listing with SE
Confirmation for demat credit from depositories
RTI to confirm refunddespatch
SE to inform members of commencement of
trad
in
g Commencement of trading (GONG ceremony)
(T+12)
Book building Post issue activities
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
29/58
29
Book building guidelines 22nd April, 2010
Electronic book the base
Validation by Syndicate Member one day
Gross recon with Escrow Banker and electronic
book
T+7 - submission of basis
T+8 - approval ofallotment
T+10 & 11 - submission ofall documents
T+12 - listing and trading
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
30/58
BOOK BUILDINGBOOK BUILDING
UNDERWRITINGUNDERWRITING
&&IPO GRADINGIPO GRADING
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
31/58
UnderwritingUnderwriting
HardHard UnderwritingUnderwriting
UnderwriterUnderwriter agreesagrees toto buybuy hishiscommitmentcommitment atat itsits earliestearliest stagestage
GuaranteesGuarantees aa fixedfixed amountamount toto thetheissuerissuer fromfrom thethe issueissue IfIf thethe sharessharesareare notnot subscribedsubscribed byby investorsinvestors
WhereWhere thethe issueissue isis devolveddevolved onon
underwritersunderwriters andand theythey havehave toto bringbringinin thethe amountamount byby subscribingsubscribing toto thethesharesshares
UNDERWRITING = INSURANCE
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
32/58
UnderwritingUnderwriting
HardHard UnderwritingUnderwriting
UnderwritingUnderwriting agreementagreement signedsignedbeforebefore thethe issueissue openingopening
UnderwritingUnderwriting notnot mandatorymandatory forforFixedFixed PricePrice IssueIssue
IfIf FPFP isis underwrittenunderwritten fullyfullyunderwritersunderwriters willwill havehave toto bringbring inin
theirtheir obligationsobligations ININ BookBook BuiltBuilt IssueIssue UnderwritingUnderwriting isis
mandatorymandatory..
UNDERWRITING = INSURANCE
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
33/58
UnderwritingUnderwriting
SoftSoft UnderwritingUnderwriting
UnderwritingUnderwriting agreementagreement onlyonly afterafterthethe issueissue closescloses
PricingPricing isis determineddetermined onlyonly afterafterissueissue closingclosing inin BookBook BuiltBuilt IssuesIssues
ParadoxParadox ofof somesome sortssorts
UnderwritingUnderwriting obligationsobligations havehave
beenbeen metmet inin thethe past????past???? HOW??HOW?? UnderwriterUnderwriter agreesagrees toto buybuy thethe
sharesshares atat laterlater stagesstages asas soonsoon asasthethe pricingpricing processprocess isis completecomplete
UNDERWRITING = INSURANCE
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
34/58
UnderwritingUnderwriting
SoftSoft UnderwritingUnderwriting
Subsequently,Subsequently, hehe placesplaces thosethose sharesshareswithwith InstitutionalInstitutional InvestorsInvestors
AlsoAlso holdsholds anan optionoption toto invokeinvoke aa forceforce
majeuremajeure (acts(acts ofof God)God) clauseclause
InIn casecase therethere areare certaincertain factorsfactorsbeyondbeyond thethe controlcontrol thatthat cancan affectaffect thethe
underwriter'sunderwriter's abilityability toto placeplace thethesharesshares withwith thethe buyersbuyers
UNDERWRITING = INSURANCE
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
35/58
Underwriting ConditionsUnderwriting ConditionsCompulsoryCompulsory forfor BookBook BuiltBuilt IssueIssue forfor NetNetOfferOffer toto thethe PublicPublic
IncaseIncase ofof CompaniesCompanies makingmaking IPOIPO underunderClauseClause 22..22..22 UnderwritingUnderwriting 5050%%
NotNot compulsorycompulsory forfor FixedFixed PricePrice IssueIssue
Minimum 5% orRs.25 Lacs whichever is Less
20 times the Net worth of the Underwriter
BRLM to enter into Underwriting Agreement with Issuing
Company
SyndicateMemberto enter into Agreement with BRLMs
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
36/58
BluPlast IndustriesBluPlast Industries (June 2006)(June 2006)
FixedFixed PricePrice IssueIssue RsRs..1010//-- plusplus RsRs.. 2222//-- ((11..11 CroreCrore
shares)shares)
IssueIssue OpenedOpened onon Monday,Monday, JuneJune 55,, 20062006
IssueIssue ClosedClosed onon Friday,Friday, JuneJune 99,, 20062006
NotNot UnderwrittenUnderwritten
ForthwithForthwith RefundRefund thethe applicationapplication moneymoney ifif MinimumMinimum
SubscriptionSubscription notnot receivedreceived (Clause(Clause 66..3333..2020 andand 66..3333..2121))
Backgroundofthe Case
CriticalIssues
UnderwritingUnderwriting isis NotNot CompulsoryCompulsory inin FixedFixed PricePrice IssueIssue (Clause(Clause88..1111..11))
ShouldShould IssueIssue CompanyCompany Underwrite?Underwrite?
YesYes.. ItIt actsacts asas InsuranceInsurance
ExtensionExtension ofof TimeTime uptoupto TwentyTwenty OneOne DaysDays
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
37/58
Emaar MGFEmaar MGF (Feb 2008)(Feb 2008)
Book Built Issue (Grade 4/5 by CARE)Book Built Issue (Grade 4/5 by CARE)
Bid Opening DateBid Opening Date Friday, February 1, 2008Friday, February 1, 2008
Bid Closing DateBid Closing Date Wednesday, February 6, 2008Wednesday, February 6, 2008
Bid Closing Date ExtendedBid Closing Date Extended Monday, February 11, 2008Monday, February 11, 2008
Withdrawal on Friday, 8 February 2008Withdrawal on Friday, 8 February 2008
Offer to PublicOffer to Public -- 10.4%10.4%
Original Price Band: Rs. 610/Original Price Band: Rs. 610/-- to Rs. 690/to Rs. 690/--
First Revision : Rs. 540/First Revision : Rs. 540/-- to Rs. 630/to Rs. 630/--
Second Revision: Rs. 530/Second Revision: Rs. 530/-- to Rs. 630/to Rs. 630/--Issue SizeIssue Size Rs. 7,077 Crs (Higher End of Price Band)Rs. 7,077 Crs (Higher End of Price Band)
Revised Issue SizeRevised Issue Size Rs. 5,436 Crs (Lower End of PriceRs. 5,436 Crs (Lower End of PriceBand)Band)
Backgroundofthe Case
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
38/58
Emaar MGFEmaar MGF (Feb 2008)(Feb 2008)
Book Built IssuesBook Built Issues Compulsory UnderwritingCompulsory Underwriting (Clause(Clause11.3.3)11.3.3)
PrePre--IPO PlacementIPO Placement 1.5%1.5% (Circular dated(Circular dated March 31, 2006March 31, 2006))
Extension of TimeExtension of Time 3 Days3 Days ((Max of 13 DaysMax of 13 Days))
Maximum Revision in PriceMaximum Revision in Price ++ 20%20% w.r.t. Floor Pricew.r.t. Floor Price(11.3.1.(viii)(b))(11.3.1.(viii)(b))
Revision in Price BandRevision in Price Band 13.12%13.12% (w.r.t. Floor Price)(w.r.t. Floor Price)
Rule 19(2)(b) of SCRRRule 19(2)(b) of SCRR, Minimum, Minimum 60%60% allotment to QIBsallotment to QIBs
CriticalIssues
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
39/58
Wockhardt HospitalsWockhardt Hospitals (Jan 2008)(Jan 2008)
BookBook BuiltBuilt IssueIssue (Grading(Grading 44//55 byby FITCH)FITCH)
BidBid OpeningOpening DateDate Thursday,Thursday, JanuaryJanuary 3131,, 20082008
BidBid ClosingClosing DateDate Tuesday,Tuesday, FebruaryFebruary 55,, 20082008
BidBid ClosingClosing datedate ExtendedExtended Thursday,Thursday, FebruaryFebruary 77,,20082008
IssueIssue WithdrawnWithdrawn onon -- Thursday,Thursday, FebruaryFebruary 77,, 20082008 dueduetoto poorpoor responseresponse toto IssueIssue
OriginalOriginal PricePrice BandBand RsRs.. 280280//-- toto RsRs.. 310310//--
RevisedRevised PricePrice BandBand RsRs.. 225225//-- toto RsRs.. 260260//-- (On(OnJanuaryJanuary 3030,, 20082008,, beforebefore IssueIssue opening)opening)
LotLot SizeSize 2020????????????
Backgroundofthe Case
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
40/58
CompulsoryCompulsory UnderwritingUnderwriting
ProvisionProvision ofof PrePre--IPOIPO placementplacement inin RHP,RHP, butbut nonoplacementplacement donedone beforebefore issueissue
ExtensionExtension ofof TimeTime TwoTwo DaysDays ((BeforeBefore thethe DateDate of ofOpeningOpening ofof thethe BidsBids))
RevisionRevision inin PricePrice ++ 2020%% ww..rr..tt.. FloorFloor PricePrice (Clause(Clause 1111..33..11(viii)(b))(viii)(b))
RevisionRevision inin PricePrice BandBand 1919..6464%% (w(w..rr..tt.. FloorFloor Price)Price)
5050%% allocationallocation toto QIBsQIBs
CriticalIssues
Wockhardt HospitalsWockhardt Hospitals (Jan 2008)(Jan 2008)
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
41/58
Deccan AviationDeccan Aviation (May 2006)(May 2006)
BookBook BuiltBuilt IssueIssue forfor 22.. 4545 CrsCrs sharesshares
BidBid OpeningOpening DateDate Thursday,Thursday, MayMay 20062006
BidBid ClosingClosing DateDate Tuesday,Tuesday, 2323,, 20082008
PricePrice BandBand ofofRsRs.. 150150//-- toto RsRs.. 175175//-- perper shareshare
FirstFirst IndianIndian IPOIPO toto everever getget extendedextended
MeantMeant toto closeclose onon MayMay 2323,, 20062006 butbut thethe datedate waswas extendedextendedtilltill MayMay 2626,, 20062006
PricePrice bandband waswas alsoalso changedchanged MarginallyMarginally toto RsRs.. 146146//-- totoRsRs.. 175175//-- perper shareshare
DeccanDeccan AviationAviation IPOIPO hadhad beenbeen SubscribedSubscribed 11..2323 onon closureclosure(May(May 2626,, 20062006))
Backgroundofthe Case
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
42/58
Deccan AviationDeccan Aviation (May 2006)(May 2006)
RevisionRevision inin PricePrice
ExtensionExtension ofofTimeTime Friday,Friday, MayMay 2626,,20062006 ((ThreeThree DaysDays))
DoesDoes itit meanmean thatthat thethe IssuerIssuer CompanyCompanycannotcannot extendextend thethe TimeTime ifif therethere isis NoNo
RevisionRevision ??EndEnd ResultResult IssueIssue waswas SubscribedSubscribed
CriticalIssues
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
43/58
IPOGradingIPOGrading (Unlisted Companies)(Unlisted Companies)
IPOIPO GradingGrading CompulsoryCompulsory fromfrom MayMay 11,, 20072007
FiveFive--pointpoint pointpoint scalescaleHigherHigher scorescore indicatingindicating strongerstronger FundamentalsFundamentals andandvicevice versaversaAllAll thethe gradesgrades toto bebe discloseddisclosedActivityActivity toto runrun parallelparallel toto thethe filingfiling of of draftdraft offerofferdocumentdocument
PricePrice ofof thethe IPOIPO notnot takentaken intointo accountaccount forfor GradingGrading
IPO Grade : Price Matrix
High Grade
High Price
High Grade
Low Price
Low Grade
High Price
Low Grade
Low Price
First IPO Grading
CRISILCRISIL
KiriKiri DyesDyes andand ChemicalsChemicals LtdLtd
22//55
(Subscription(Subscription 11..33 times)times)
ICRAICRA
SRSSRS EntertainmentEntertainment 22//55
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
44/58
IPOGradingIPOGrading (Unlisted Companies)(Unlisted Companies)
Business Prospects and Competitive PositionBusiness Prospects and Competitive PositionIndustry ProspectsIndustry Prospects
Company ProspectsCompany Prospects
Financial PositionFinancial Position
Management Quality
Management QualityCorporate Governance PracticesCorporate Governance Practices
Compliance and Litigation HistoryCompliance and Litigation History
New ProjectsNew Projects Risks and ProspectsRisks and Prospects
Key ComponentsofInvestment Decision
Fundamental
Analysis
Returns
AnalysisIn est r
referen e
Factors ConsideredforIPO Grading
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
45/58
50.00
75.00
100.00
125.00
150.00
175.00
200.00
225.00
250.00
12-Apr
13-Apr
14-Apr
15-Apr
16-Apr
17-Apr
18-Apr
19-Apr
20-Apr
21-Apr
22-Apr
23-Apr
24-Apr
25-Apr
26-Apr
27-Apr
28-Apr
29-Apr
30-Apr
1-May
2-May
3-May
4-May
5-May
6-May
7-May
8-May
9-May
10-May
11-May
12-May
13-May
14-May
15-May
16-May
17-May
18-May
19-May
20-May
21-May
Market Price
Offer Price
ORBIT CORP.LTD.OFF ER PR ICE : Rs.110.00
OPENING DATE : 20/03/2007
LISTING DATE : 12/04/ 2007
ISSUE AM OUNT : Rs.100.10 CRORE
IPO GRADING : 1/5108.54%
16.32%
TIMES SUBSCRIBED
Q IB : 7.23
NIB : 4.06
RET AIL : 0.74
TOTAL : 4.48
39 Days
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
46/58
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
110.00
120.00
07-Feb
09-Feb
11-Feb
13-Feb
15-Feb
17-Feb
19-Feb
21-Feb
23-Feb
25-Feb
27-Feb
01-Mar
03-Mar
05-Mar
07-Mar
09-Mar
11-Mar
13-Mar
15-Mar
17-Mar
19-Mar
21-Mar
23-Mar
25-Mar
27-Mar
29-Mar
31-Mar
02-Apr
04-Apr
06-Apr
08-Apr
10-Apr
12-Apr
14-Apr
16-Apr
18-Apr
20-Apr
22-Apr
24-Apr
26-Apr
28-Apr
30-Apr
02-May
04-May
06-May
08-May
10-May
12-May
14-May
16-May
18-May
20-May
Market Price
Offer Price
CAMBRIDGE TECHNOLOGY ENTERPRISES
LTD.OFFER PR ICE : Rs.38.00
OPENING DATE : 29/12/2006
LISTING DATE : 07/02/2007
ISSUE AM OUNT : Rs.15.40 CR ORE
IPO GRADING : 2/5
200.79%
54.34%
163.0
3%
TIMES SUBSCRIBED
QIB : 3.76NIB : 3.29
RETA IL : 11.21
TOTAL : 6.71
103 Days
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
47/58
50.00
60.00
70.00
80.00
90.00
19-Mar20-Mar21-Mar22-Mar23-Mar24-Mar
25-Mar26-Mar27-Mar
28-Mar29-Mar30-Mar31-Mar
1-Apr2-Apr3-Apr4-Apr
5-Apr6-Apr7-Apr8-Apr
9-Apr10-Apr11-Apr12-Apr13-Apr
14-Apr15-Apr16-Apr17-Apr
18-Apr19-Apr20-Apr
21-Apr22-Apr23-Apr24-Apr25-Apr
26-Apr27-Apr28-Apr29-Apr30-Apr1-May2-May3-May4-May5-May6-May7-May8-May
9-May
MarketPrice
OfferPrice
AMD
METPLASTLTD.
OFFERPRICE
:Rs.75.00
OPENINGDATE
:15/02/2007
LISTINGDATE
:19/03/2007
ISSUE
AM
OUNT
:Rs.68.22CRORE
IPO
GRADING
:3
/5
8.93%
4.40
TIMESSUBSCRI
QIB
:
1.31
NIB
:10.16
RETAIL
:
7.66
TOTA
L:
4.42
63Days
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
48/58
50.00
60.00
70.00
80.00
90.00
100.00
110.00
120.00
130.00
140.00
150.00
7-Mar8-Mar9-Mar
10-Mar11-Mar12-Mar13-Mar
14-Mar15-Mar16-Mar17-Mar18-Mar19-Mar20-Mar21-Mar22-Mar23-Mar24-Mar25-Mar26-Mar27-Mar28-Mar29-Mar30-Mar
31-Mar1-Apr2-Apr3-Apr4-Apr5-Apr6-Apr7-Apr8-Apr9-Apr
10-Apr11-Apr12-Apr13-Apr14-Apr15-Apr16-Apr
17-Apr18-Apr19-Apr20-Apr21-Apr22-Apr23-Apr24-Apr25-Apr26-Apr27-Apr28-Apr29-Apr30-Apr1-May2-May3-May
4-May5-May6-May7-May8-May9-May
10 May
MarketPrice
OfferPrice
EVINIXACCESSORIESLTD.
OFFERPRICE
:Rs.120.00
OPENINGDATE
:12/02/2007
LISTINGDATE
:07/03/2007
ISSUE
AM
OUNT
:Rs.42.00CRO
RE
IPOGRADING
:2/5
T
IMESSUBSC
Q
IB
:
1.16
N
IB
:11.98
R
ETAIL
:
2.27
TOTAL:
3.42
-9.17%
-38.54%
75Days
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
49/58
IPOGRADINGIPOGRADINGWas grading not a factor inWas grading not a factor ininvestors' decision makinginvestors' decision makingprocess?process?
Or is that the bullish secondaryOr is that the bullish secondarymarketmarket conditions will alwaysconditions will alwaysoverweigh?overweigh?
Good to remember that IPOsGood to remember that IPOscan be floated only in buoyantcan be floated only in buoyantmarkets.markets.
Even the best issues will notEven the best issues will not
sell in a bear marketsell in a bear marketMarket replete with examplesMarket replete with examples
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
50/58
IPOGRADINGIPOGRADING
It is being assumed byIt is being assumed bymost that IPO gradingmost that IPO gradingis a perfect and anis a perfect and anobjective process.objective process.
If that was the case,If that was the case,there are no problems.there are no problems.
In reality, it appearsIn reality, it appearsto be a hugelyto be a hugely
subjective and ansubjective and animperfect processimperfect process..
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
51/58
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
52/58
BASIS OF ALLOTMENTBASIS OF ALLOTMENT
## HISTORIC TRENDS OFTHEHISTORIC TRENDS OFTHEPASTPAST
## WEIGHTAGE FOR LOWERWEIGHTAGE FOR LOWERCATEGORYCATEGORY
## HIGHER PERCENTAGE OFHIGHER PERCENTAGE OFALLOCATIONALLOCATION
## MULTIPLE APPLICATIONSMULTIPLE APPLICATIONS
(EXAMPLES)(EXAMPLES)## EXAMPLES OF RS/RPPL/ REPLEXAMPLES OF RS/RPPL/ REPL
## STOCK INVESTSSTOCK INVESTS
BASIS OF ALLOTMENTBASIS OF ALLOTMENT
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
53/58
BASIS OF ALLOTMENTBASIS OF ALLOTMENT
## CHANGE TO PRORATACHANGE TO PRORATA
ALLOTMENT IN 1993/94ALLOTMENT IN 1993/94## SEGREGATION OF APPLICATIONSSEGREGATION OF APPLICATIONS
2 CATEGORIES2 CATEGORIES
## SMALL INVESTORSSMALL INVESTORS
GRIEVANCESGRIEVANCES## REVERSE NUMBERINGREVERSE NUMBERING
## ALLOTMENT IN DEMATFORMALLOTMENT IN DEMATFORM20012001
## PREREQUISITES FOR OPENINGPREREQUISITES FOR OPENINGDEMAT A/C TILL 2005DEMAT A/C TILL 2005
## REQUIREMENT SPECIFIED POSTREQUIREMENT SPECIFIED POSTIPO SCAMIPO SCAM
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
54/58
BASIS OF ALLOTMENTBASIS OF ALLOTMENT
## FORMATION OF COMMITTEEFORMATION OF COMMITTEEFOR MULTIPLEFOR MULTIPLEAPPLICATIONS IN 2001APPLICATIONS IN 2001UNDER CHAIRAMNSHIP OF JKUNDER CHAIRAMNSHIP OF JKVERMAVERMA
## SCAM AS IT UNFOLDEDSCAM AS IT UNFOLDED
## CASE OF PARAG JHAVERICASE OF PARAG JHAVERI20072007
## MISUSE OFTHE SYSTEMMISUSE OFTHE SYSTEM
BA I F ALL TMENTBA I F ALL TMENT
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
55/58
BA I F ALL TMENTBA I F ALL TMENT(contd)(contd)
## EXAMPLES OF NEW BASISEXAMPLES OF NEW BASIS
## MINIMUM APPLICATION SIZEMINIMUM APPLICATION SIZERs.5,000/Rs.5,000/-- TO Rs.7,000/TO Rs.7,000/--## MINIMUM APPLICATION LOT INMINIMUM APPLICATION LOT INTHE RANGETHE RANGE
## PRICE BAND IS SAY 500/PRICE BAND IS SAY 500/-- TOTO
530530-- LOT SIZE CAN BE 10 TO 13LOT SIZE CAN BE 10 TO 13## ISSUERTO DECIDE INISSUERTO DECIDE IN
CONSULTATION WITH BRLMCONSULTATION WITH BRLM## BIDS TO BE IN MULTIPLE OFBIDS TO BE IN MULTIPLE OF
MINIMUM LOTMINIMUM LOT
## IF 12 IS LOT, BID LOTS WILL BEIF 12 IS LOT, BID LOTS WILL BE24,36,48,60, 72,84,96 UPTO 19224,36,48,60, 72,84,96 UPTO 192FOR RETAILFOR RETAIL
BA I F ALL TMENTBA I F ALL TMENT
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
56/58
BA I F ALL TMENTBA I F ALL TMENT(contd)(contd)
## TOTAL SHARES ON OFFER @Rs.500/TOTAL SHARES ON OFFER @Rs.500/--PER SHARE SAY 10 CROREPER SHARE SAY 10 CRORE
## FOR RETAIL SAY 3.5 CRORESFOR RETAIL SAY 3.5 CRORES
## RETAIL OVERSUBSCRIBED 6 TIMESRETAIL OVERSUBSCRIBED 6 TIMES
12/6=2, 24/6=4, 48/6=812/6=2, 24/6=4, 48/6=8 ----------
LOTTERYLOTTERY72/6=1272/6=12 --------FIRM 84/6=14FIRM 84/6=14 -------- FIRMFIRM
96/6=1696/6=16 --------FIRM 192/6=32FIRM 192/6=32--------FIRMFIRM
## IF RETAIL IS 7 TIMESIF RETAIL IS 7 TIMES
12/7=1.71=2 24/7=3.42=3 }12/7=1.71=2 24/7=3.42=3 }LOTTERYLOTTERY
48/7=6.85=7 72/7=10.28=10 }48/7=6.85=7 72/7=10.28=10 }
84/7=1284/7=12 -------- FIRM 192/7=27 FIRMFIRM 192/7=27 FIRM
KARVY BASIS OF ALLOCATION - BOOK BUILT PORTION FOR RETAIL INVESTORS
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
57/58
610.22 13.572340
Number of Amount Subscription
Shares (Face value) List
68400000 10 684000000 Opening :
68400000 10 684000000 Closing :
No. of Total No.of Propor - Number of Total No. of
Shares Number of Shares tionate successful Shares Surplus/
applied for applications applied in shares Before After applicants allocated/ Defecit
(Category received each available rounding rounding (after rounding allotted
wise) category off off off) (7)-(14)
(2) (3) (5) (7) (8) (9 (10) (12) (14) (16)
15 60176 902640 66506 1.11 15 2 27 4457 66855 -349
30 82844 2485320 183117 2.21 15 4 27 12273 184095 -978
45 67812 3051540 224835 3.32 15 2 9 15069 226035 -1200
60 112793 6767580 498630 4.42 15 8 27 33420 501300 -2670
75 40359 3026925 223022 5.53 15 10 27 14948 224220 -1198
90 70934 6384060 470373 6.63 15 4 9 31526 472890 -2517
105 151763 15935115 1174087 7.74 15 14 27 78692 1180380 -6293
120 66497 7979640 587934 8.84 15 16 27 39406 591090 -3156
135 19057 2572695 189554 9.95 15 2 3 12705 190575 -1021
150 57122 8568300 631306 11.05 15 20 27 42313 634695 -3389
165 14203 2343495 172667 12.16 15 5 6 11836 177540 -4873
180 30708 5527440 407258 13.26 15 8 9 27296 409440 -2182
195 19752 3851640 283786 14.37 15 1 1 19752 296280 -12494
210 172499 36224790 2669016 15.47 15 1 1 172499 2587485 81531
1 1 147 1173 1173 -1173
225 3656564 822726900 60617909 16.58 16 1 1 3656564 58505024 2112885
1 10 17 2150923 2150923 -2150923
4623083 928348080 68400000 4173929 68400000 0
Allocation per
RAND TOT
Face value
Rs.
to
applicants
allottees
15-01-2008
Ratio of
18-01-2008
Public issue of 68400000 equity shares of Rs 10/- each issued for cash at a price of Rs.430/- per share.
NAME OF THE COMPANY : RELIANCE POWER LIMITED
(1) No.of allottees per Rs.1 Lakh of offer (upto (2) Subscription as m
Net quantum available for allotment
Shares issued vide Offer Document dated 19.01.
Applicant
8/8/2019 WIRC Study Circle Meet ICDR vs DIP and IPO New Process
58/58
THANK YOUTHANK YOUCS B. Narasimhan, Vice PresidentCS B. Narasimhan, Vice President
Karvy Computershare Pvt LtdKarvy Computershare Pvt Ltd
24, Maharashtra Chamber of Commerce Lane24, Maharashtra Chamber of Commerce Lane
Fort, MumbaiFort, Mumbai -- 400 023400 023
[email protected]@karvy.com
Phone Off 22838497 Mob 9004089490Phone Off 22838497 Mob 9004089490