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abhishreshthaa September 3rd, 2010 06:28 PM

  • Company plans an IPO via book building Route

  • Appointment of Lead Managers/merchant bankers as a book runners

  • Preparation of a draft prospectus (containing all mandatory company disclosers other than price)

  • Draft prospectus filed simultaneously with (SEBI)
  • - Any modification to be incorporated.

  • Applications from the public to bid.
  • - Advt. in not less than 3 news paper
  • The advertisement shall also contain the following:
  • - The date of opening and closing of the bidding.
  • - The names and addresses of the syndicate members
  • as well as the bidding terminals for accepting the bids.
  • - The method and process of bidding.

Procedure for bidding:
  • Bid shall be open for at least 5 days.

  • Bidding shall be permitted only if an electronically linked transparent facility is used.

  • The ‘syndicate members’ shall be present at the bidding
    centers so that at least one electronically linked computer
    terminal at all the bidding centers is available for the purpose
    of bidding.
  • The number of bidding centers shall not be less than the
  • number of mandatory collection centers specified in these
  • Guidelines.
  • Individual as well as institutional investors shall place their
  • bids only through the ‘syndicate members’ who shall have
  • the right to vet the bids.
  • The investors shall have the right to revise their bids.
  • Revised Bid must only be made on that Revision Form.
  • Bid or the revise Bid should not be less than the
  • Floor Price or higher than the Cap Price.
  • Non-institutional and QIB Bidders can not bid at
  • cut-off price.

Price discovery begins through the bidding process.
  • 1. The Lead Manager and the Underwriter play an important role in the
  • price determination of the issue.
  • 2. The following accounting ratios may be given as the basis
  • for issue price:

  • - EPS, pre-issue, for the last three years
  • (as adjusted for changes in capital).
  • - P/E, pre-issue and comparison thereof with industry P/E
  • where available (giving the source from which industry P/E
  • has been taken).
  • - Average return on net-worth in the last three years.
  • - Net-Asset Value per share based on last balance sheet.

  • 3. On closure of the book, the quantum of shares ordered and the respective prices offered are known.

  • 4. The price discovery is a function of demand at various
  • prices.

  • 5. The book runner and the company conclude the
  • pricing and decide the allocation
  • 7.Refund of application money with in 15 days.

  • 8. Allotment of shares within 30 days.

  • 9. Listing on the stock exchanges.

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