investment management

1. DEVELOPMENT IN THE
NEW ISSUE MARKET
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2. 
 INTRODUCTION
 NEW ISSUE MARKET
 INTERMEDIARIES
 CATEGORIES OF COMPANIES
 APPLICATION OF SHARES
 FREE PRICING OF ISSUE
 ISSUE ADVERTISEMENT
 CONCLUSION
 REFERENCES
CONTENT
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3.  The NIM has emerged as an important source of corporate
financing in India after 1985
 The NIM was being regulated by in 1992
 It was abolished and the was established for providing
protection to investors and controlling the operations of NIM
 The SEBI was to cover all the activities of the NIM beginning with
the planning of the capital issues and completing the formalities
until the post issue activities.
INTRODUCTION
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4. NEW ISSUE MARKET
 It refers to the set-up which helps the industry to raise the funds by issuing
different types of securities.
 These securities are issued directly to the investors through the mechanism
called primary market or new issue market.
 The securities take birth in this market.
 EXAMPLE: MUTHOOT FINANACE LTD
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5. MERCHANT BANKER
They draft prospectus
 Appoint registrars for share application and transfers
Provide arrangements for underwriting
 select brokers
Bankers to the issue
Handle past issue problems

6. Cont..
• Merchant bankers must be regulated with SEBI.
• Merchant bankers has to pay a registration fee annually.
• A lead manager has to prepare prospectus and submit to the
SEBI at least two weeks before the issue.
No of lead manager Issue
2 50 crores
3 50-100 crores
4 100-200crores

7. INTERMEDIARIES
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8. 
Underwriters
 Underwriting is no longer mandatory.
 They should have a certificate of registration with SEBI.
Bankers to the issue
 He should registered with SEBI.
 He has to pay a fees of Rs 2.5 lakhs for the first two years and Rs 1 lakh for
the third year
Brokers to the issue
 Not compulsory
Registrars
 They keep a record of the investor and assist companies for allotment of
securities
Transfer Agent
 They maintain records of holder of security and deal with transfers and
redemption of securities
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9. 
Debenture trustee:
 Only schedule commercial banks, public financial institutions,
insurance companies are entitled to act as Debenture trustee. He
has to pay a fees of Rs 2 lakhs for the first two years and Rs 1 lakh
for the third year
Category 1 Both Registrars
And Transfer
Agent
Capital Adequacy
Requirement =
6 Lakhs
Category 2 Registrars Or
Transfer Agent
Capital Adequacy
Requirement =
3 Lakhs
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10. EXAMPLE ‘S
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11. CATEGORIES OF COMPANIES
Category A:
 New companies with less than 12 months in operation.
 At least 25% and 20% of total issued capital of rs.100 crores should be
through promoters .
Category B:
 Companies which have a good past record of making profits for the last five
years and are making their first public issue.
 They are free to price their issue at par or premium.
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12. CONT..
Category C:
 Private, closely held and unlisted companies which are making their first
public issue.
 Companies should have a good past record of making profits for the at least
three out of five years.
 It can issue shares at premium.
Category D:
 Private, closely held and unlisted companies without a consistent record of
past profitability.
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13. CONT..
Category E:
 Consist of the same group of companies without consistent past record of
profitability but support by existing companies with a consistent record of
profitability in the last five years
Category F:
 Is of existing listed companies that are making public issue
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14. CONT..
Category G:
 Existing companies of past profitability offering to public without issuing
fresh capital and seeking disinvestment.
 The promoters share should be at least 25% and they can offer their shares
at premium.
Category H:
 Existing companies of without profitability offering to public without issuing
fresh capital and seeking disinvestment.
 They can offer their shares at par.
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15. APPLICATION OF SHARES
 The application of shares is also made in accordance with SEBI guidelines.
 The minimum application money paid is 25% of the issue price.
 EG: If the face value is Rs.10, a minimum of should be paid at the
time of application of shares
 If application money receives 90% of the amount issued within 120 days of
opening of the issue-Valid issue
 Within 45 days of the closing of the issue a repot signed by the CA must be
sent to the SEBI
 If there is oversubscription, proportionate allotment is made it to all investors.
 If there is under subscription, subscription money is returned to the
investors.
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16. Cont..
Bought Out Deals:
 An institution or whole sale investor buys share of an unlisted company with
the intention of making an offer for sale to the retail public later at much
higher prices.
 Suitability: Bought out deals are ideally suited in the circumstances when the
money needs to be arranged fast and projects may suffer unnecessarily of
the money is not available in time.
 Main difference :
BOUGHT OUT DEALS:
UNLISTED COMPANIES
PRIVATE PLACEMENT:
LISTED COMPANIES
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17. Free pricing of issue
 SEBI with objective of broadening the investors base, dispensed with the
requirement of standard denomination of Rs.10 and Rs.100, gave freedom
to companies with dematerialized shares to issue shares at any
denomination. It should be indicated to investors, in order to enable the
investors to take investment decisions. They can issue shares at par or
premium.
 Eg: The existing companies, with shares at Rs.10 and Rs.100, also can
avail of this facility by consolidating or splitting their existing shares.
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18. ISSUE ADVERTISEMENT
 SEBI has issued guidelines regarding code of ‘Advertisement ‘ for the issue
of shares.
 It should be clear and fair and not misleading and false.
 A new issue is required to be advertised in the newspapers and through
brochures, pamphlets and circulars.
 It should not be promise or guarantee of any fact which is not present in the
offer document, It should be released with risk factors.
 Models and celebrities are not allowed.
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19. BOOK BUILDING
• Book building is a process of generating, capturing, and recording investor
demand for shares during an initial public offering (IPO), or other securities
during their issuance process, in order to support efficient price discovery.
• The process by which an underwriter attempts to determine at what price to
offer an IPO based on demand from institutional investors.
• In U.S it is called ‘ soft underwriting ‘
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20. Malegam Committee 1995
 The Malegam Committee on Disclosure Requirements in Offer Document,
under the chairmanship of Shri Y.H. Malegam, has submitted a report to
SEBI. This report has been prepared based on the deliberations of the
Committee, which took place over 25 meetings. The report contains various
recommendations pertaining to extant disclosure requirements in Offer
Document. The recommendations have been made on various areas of
disclosures including standardization of disclosure requirements in offer
document, format of abridged prospectus, format of issue advertisements
etc
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21.  The changes is new issue market especially those
relating to market intermediaries, issue procedures
and disclosures have helped in removing
deficiencies and inadequacies and in bringing
about new mechanism of trading securities.
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22. TIME TO ANSWER:

 Which is called ‘ soft underwriting ‘
 Bought out deals usually in
 When such shares are issued for the 1st time in the share market, it is called as
and the further issue is called
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23.  INVESTMENT MANAGEMENT-
 PREETI SINGH
 FINANCIAL MARKET AND SERVICES-
 E.GORDEN AND NATRAJAN
REFERENCES
www.slideshare.net/ragarwal76/
new-issue-market
www.sebi.gov.in/commreport/mela
gamreport.pdf
www.yourarticlelibrary.com/inves
tment/recent-
trends...market.../1273/
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24. 
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