Details about IPO
Posted on: 21/Jan/2016 12:31:21 PM
Initial Public Offering or IPO refers to the system where an organisation sells their shares to the interested investors for the first time.
Organisations use IPO in order for their business expansion plans. If an organization issues IPO, it will have no restrictions to buy or sell its shares in the stock market.
In recent times, organisations like Inter Globe Aviation & Cafe Coffee day have issued IPOs and are listed in BSE (Bombay stock Exchange) & NSE (National Stock Exchange).
There are some important issues about IPO.
Book building is a systematic 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 investors will be allotted a particular price for the organization`s shares or fix a range of price for their shares.
The minimum or maximum price of the share is decided depending on the fluctuations in the stock exchange.
Cooling-off period is an interval during which two sides in a disagreement can try to settle their differences before taking further action. This may usually be around 20 days. The Management Board of the Organisation will release reports and ascertain the opinion of the new investors.
Red Herring Prospectus is a prospectus, which does not have details of either price or number of shares being offered, or the amount of issue.
This means that in case price is not disclosed, the number of shares and the upper and lower price bands are disclosed. The investors who buy the IPO auction shares will become members of the Syndicate.
The assessors, known as book runners, appoint authorized brokers. They take the task of underwriting to receive the applications for shares on behalf of the syndicate.
Lead manager - Bank or underwriting firm that coordinates the activities of an underwriting syndicate (of which it is the organizer and a member) and plays the primary role in launch and sale of the issue of securities underwritten by the syndicate. They are also called lead underwriter.
The Lead managers perform jointly with the Syndicate and distribute the shares and strengthen the activities. The Lead manager`s role is oftern performed by banks, brokers, commercial banks, or Financial concerns.
