Needless to say each and every step involved in the IPO sequence has to happen under the SEBI guidelines. In general, the following are the sequence of steps involved.
• Appoint a merchant banker. In case of a large public issue, the company can appoint more than 1 merchant banker
• Apply to SEBI with a registration statement – The registration statement contains details on what the company does, why the company plans to go public and the financial health of the company
• Getting a nod from SEBI – Once SEBI receives the registration statement, SEBI takes a call on whether to issue a go ahead or a ‘no go’ to the IPO
• DRHP – If the company gets the initial SEBI nod, then the company needs to prepare the DRHP. A DRHP is a document that gets circulated to the public. Along with a lot of information, DRHP should contain the following details..
a.The estimated size of the IPO
b.The estimated number of shares being offered to public
c.Why the company wants to go public and how does the company plan to utilize the funds along with the timeline projection of fund utilization
d.Business description including the revenue model, expenditure details
e.Complete financial statements
f.Management Discussion and Analysis – how the company perceives the future business operations to emerge
g.Risks involved in the business
h.Management details and their background
• Market the IPO – This would involve TV and print advertisements in order to build awareness about the company and its IPO offering. This process is also called the IPO road show
• Fix the price band – Decide the price band between which the company would like to go public. Of course this can’t be way off the general perception. If it is, then the public will not subscribe for the IPO
• Book Building – Once the road show is done and price band fixed the company now has to officially open the window during which the public can subscribe for shares. For example, if the price band is between Rs.100 and Rs.120, then the public can actually choose a price they think is fair enough for the IPO issue. The process of collecting all these price points along with the respective quantities is called Book Building. Book building is perceived as an effective price discovery method
• Closure – After the book building window is closed (generally open for few days) then the price point at which the issue gets listed is decided. This price point is usually that price at which maximum bids have been received.
• Listing Day – This is the day when the company actually gets listed on the stock exchange. The listing price is the price discovered through the book building process.
0 comments:
Post a Comment