primary markets
TRANSCRIPT
![Page 1: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/1.jpg)
Primary Markets
![Page 2: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/2.jpg)
Primary Markets
• Topics– Concept– Methods of Raising Funds
• Public Issue• Rights Issue• Private Placements
![Page 3: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/3.jpg)
Primary Markets Concept
![Page 4: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/4.jpg)
Primary Market- Concept
• Definition – A Primary Market is a market for new issues. Hence also called the new issues market and a market for fresh capital.
• Fund Mobilization – It is achieved in the following manner:– Prospectus or Public Issues– Rights Issues– Private Placements
• By – – Government Companies, non government public limited
companies(private sector), public sector undertakings, banks and financial institutions.
![Page 5: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/5.jpg)
Primary Market- Concept
• 3 Categories of Participants– Issuers of securities– Investors in securities– Intermediaries – Renders services to both issuers and investors.
• Enables the sale and purchase of securities
– Intermediaries to an issue• Merchant Bankers or Book Running Lead Managers – Handles the pre issue
and post issue activities.• Registrar to the issue – finalise the list of eligible allottees, crediting of shares to
demat accounts and dispatch of refunds• Bankers to the Issue – activities relating to collecion of management accounts,
dispatching refund amounts.
![Page 6: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/6.jpg)
Methods of Raising Funds
![Page 7: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/7.jpg)
Primary Market – Methods of Raising Funds
• Primary Issues are classified into– Public Issue
• IPO – A first time offer of sale of securities by an unlisted company
• FPO – An offer of sale of securities by a listed company
– Rights Issue• An offer of Sale of Securities to existing
shareholders.
![Page 8: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/8.jpg)
Primary Market – Methods of Raising Funds
– Private Placement• Private Placement (Unlisted Companies) – Direct sale of
securities to some selected people or to financial institutions• Preferential Isssue – Allotment of shares to some select
group of persons in terms of provision of Chapter XIV of SEBI(DIP Guideline)
• Qualified Institutions Placement(For listed Companies).
– Bonus Issue – Another way to raise capital. • This does not bring in any fresh capital.• Bonus is the capitalisation of free reserves.• Enables the company to restructure its capital.
![Page 9: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/9.jpg)
Primary Market – Methods of Raising Funds
• Increases the Company’s equity capital
• Primary issuance by companies are governed by the SEBI in terms of SEBI(Issue of Capital and Disclosure Requirements) Regulations, 2009.
![Page 10: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/10.jpg)
Primary Markets – Public Issue• Public Issue
– Initial Public Offering(IPO) – It is an offering of either a fresh issue of securities or an offer for sale of existing securities or both by an unlisted company for the first time to public.
– Follow on Public Offering(FPO) – It is an offering of either a fresh issue of securities or an offer for sale to the public by an already listed company through an offer document.
– Prospectus is an offer document in case of a public issue.
![Page 11: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/11.jpg)
Primary Markets – Rights Issue• Rights Issue –
– It is the issue of new shares in which the existing shareholders are given pre-emptive rights to subscribe to the new issue on a pro rata basis.
– The Rights are given in the form of Offer to existing shareholders to subscribe to a proportionate number of fresh shares at a pre-determined price.
– To expand, diversify, restructure
![Page 12: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/12.jpg)
Primary Markets – Private Placement
• Private Placement refers to the direct sale of newly issued securities by the issuer to a small number of investors through merchant bankers. The number of investor can go only up to 49. These investors are select Financial Institution, corporates, banks and high net worth individuals.
![Page 13: Primary Markets](https://reader030.vdocuments.site/reader030/viewer/2022032620/55ced28abb61eb64558b4576/html5/thumbnails/13.jpg)
Rohit Kochhar