1. MANAGEMENT OF IPO What is an IPO Why is an IPO required Key Terms used What is the process of an IPO What are the critical areas to focus

2. MANAGEMENT OF IPO What is an IPO? An Initial Public Offer (when offered for the first time) Subsequent offers are termed as FPOs (Follow-on Public Offer) The key term is “Public” (meaning large number of people) The offer shall be open for everybody to subscribe

3. MANAGEMENT OF IPO Why is an IPO required? To gather large amount of capital To dilute the risk of loss To ensure the listing of shares To have a widespread shareholder base

4. MANAGEMENT OF IPO Key Terms used SEBI SEBI Guidelines PromotersPublicProspectusPrice Price Band Merchant Banker Registrar and Share Transfer Agent (RTA)

5. MANAGEMENT OF IPO Key Terms used Eligibility criteria QIB (Qualified Institutional Buyers) Book Building Green Shoe Option Offer document Underwriting Composite issue Depository

6. MANAGEMENT OF IPO The process of an IPO Eligibility criteria : Net Tangible assets of Rs. 3.00 Crore in each of the preceding 3 years. and Track record of Distributable profits at least 3 out of 5 preceding years. and The Company has a Networth of Rs. 1.00 Crore in preceding 3 years. and The proposed issue should not exceed 5 times of its Pre-issue networth.

7. MANAGEMENT OF IPO The process of an IPO - Eligibility criteria: (Alternate route) Book building process and 50% of the offer to QIBs or or 15% participation in project by F/Is or Schedule Banks; 15% participation in project by F/Is or Schedule Banks; 10% of the Project cost from appraiser; 10% of the Project cost from appraiser; 10% of the Issue to QIBs 10% of the Issue to QIBs and and Minimum post issue face capital of Rs.10 Crores Minimum post issue face capital of Rs.10 Crores or or Market making for 2 years Market making for 2 years and and Minimum number of allottees atleast 1000 Minimum number of allottees atleast 1000

8. MANAGEMENT OF IPO Appointment of merchant Banker Appointment of Registrar and Share Transfer Agent Grading of the Company’s Securities Drafting of Prospectus – filing with SEBI Filing of Prospectus with Stock Exchanges Obtaining of In-principle approval from stock exchange

9. MANAGEMENT OF IPO What is the process of an IPO Appointment of Brokers, Advertisers and Bankers Conducting Road shows and Press Conference Opening and closing of Subscription list Preparation of Basis of Allotment Allotment of shares Listing of shares

10. MANAGEMENT OF IPO What are the critical areas to focus Compliance with SEBI Guidelines 90% subscription of the issue Underwriting Agreements Firm Allotments Listing approvals from the Stock Exchanges ROC approval for the prospectus Advertising and Road Shows Statutory advertisements In-time allotments and refunds Listing of the shares with the Exchanges

11. MANAGEMENT OF IPO SEBI GUIDELINES: 1. Filing of prospectus: Prospectus to be filed with SEBI Prospectus to be filed with SEBI Through Merchant Banker At least 30 days < filing with ROC SEBI may suggest changes < 30 days SEBI to consider only after approval from St.Ex Issuer is obligated SEBI is not obligated

12. MANAGEMENT OF IPO SEBI GUIDELINES: 2. Application for Listing: No IPO without application for listing No IPO without application for listing 3. Dematerialization of shares:, Agreement with Depository Present shares also to be in dmat public may opt either physical or dmat shares

13. MANAGEMENT OF IPO SEBI GUIDELINES: 4. “Qualified Institutional Buyer” shall mean: a. public financial institution as defined in section 4A of the Companies Act, 1956; b. scheduled commercial banks; c. mutual funds; d. foreign institutional investor registered with SEBI; e. multilateral and bilateral development financial institutions; f. venture capital funds registered with SEBI;

14. MANAGEMENT OF IPO SEBI GUIDELINES: g. foreign venture capital investors registered with SEBI; h. state industrial development corporations; i. insurance companies registered with the Insurance Regulatory and Development Authority (IRDA); j. provident funds with minimum corpus of Rs. 25 crores; k. pension funds with minimum corpus of Rs. 25 crores).

15. MANAGEMENT OF IPO SEBI GUIDELINES: 5. Exemption from Eligibility Norms: Banking Co. including Pvt. Banks Subject to licensing by RBI New Bank being set up on acquisition or take over of a bank An infrastructure Company, whose project is appraised by F/I, IL & FS and IDFC

16. MANAGEMENT OF IPO SEBI GUIDELINES: 6. IPO Grading: No IPO unless; (as on the date of filing the prospectus with ROC): Grading for IPO has been obtained from at least one agency Grading for IPO has been obtained from at least one agency Grading and the rationale have been included in the prospectus Grading and the rationale have been included in the prospectus Grading expenses to be borne by the issuer Grading expenses to be borne by the issuer

17. MANAGEMENT OF IPO SEBI GUIDELINES: 7. Present shares to be fully paid-up: No IPO, if there are any shares partly paid up as on the date of IPO No IPO, if there are any shares partly paid up as on the date of IPO The Shares to be fully paid up or forfeited

18. MANAGEMENT OF IPO SEBI GUIDELINES: 8. Pricing of the Securities: Listed Co’s Unlisted Co.s Infrastructure co. Free price Free price Free price Subject to the Disclosure norms issued by SEBI Banks to obtain approval from RBI

19. MANAGEMENT OF IPO SEBI GUIDELINES: 9. Price Band: Price Band to be 20% Max price can be 20% above the floor price Board of directors may be authorized to fix the price

20. MANAGEMENT OF IPO SEBI GUIDELINES: 10. Denomination of shares Denomination of the shares is not restricted In case the issue price is <Rs.500, the Face Value shall be Rs.10/- The Face Value may be less, where the issue price is Rs.500 or more Full disclosure of the face value in offer document

21. MANAGEMENT OF IPO SEBI GUIDELINES: 11. Promoter Contribution and Lock-in: 20% of the post issue share cap is to be held by promoters 20% of the post issue share cap is to be held by promoters 12. Securities not included in the above: Where the equity has been acquired during the preceding 3 years and; - where the consideration is not cash - where the consideration is not cash or or - where the shares are given through bonus issue from revaluation reserve - where the shares are given through bonus issue from revaluation reserve

22. MANAGEMENT OF IPO SEBI GUIDELINES: Guidelines on issue of advertisement: advertisement shall be truthful, fair and clear shall not contain untrue or misleading or misleading statement disclose all relevant facts clear, concise and understandable language Avoid technical, legal, complex terms No advertisement in Crawlers Reference to the red-herring prospectus

23. MANAGEMENT OF IPO SEBI GUIDELINES: Guidelines on issue of advertisement: No slogans, captions or one liners Shall include risk factors Risk factors to be given in the same font size The print size shall not be less than point size 7 The style of the font shall be Times new roman No advertisement relating to the full or over subscription while the issue is open Closure announcement can be made only after RTA certifies that 90% is subscribed