QWhat is an Initial
Public Offering?
A
Initial Public Offering
(IPO) is when an unlisted company makes either a fresh issue of securities or
an offer for sale of its existing securities or both for the first time to the
public. This paves way for listing and trading of the issuer’s securities.
QWhat is an IPO?
A
An Initial Public Offer
(IPO) is a means of collecting money from the public by a company for the first
time in the market to fund its projects. In return, the company gives the share
to the investors in the company.
QWhat is a Follow on
Public Offering?
A
A follow on public
offering (FPO) is when an already listed company makes either a fresh issue of
securities to the public or an offer for sale to the public, through an offer
document. An offer for sale in such scenario is allowed only if it is made to
satisfy listing or continuous listing obligations.
QWhat is ASBA, with
respect to IPOs?
A
ASBA stands for
Application Supported by Blocked Amount. The facility was introduced by SEBI in
July 2008 to help retail investors apply in IPOs, FPOs and rights issue of
companies, with ease.
Earlier while making an application in an IPO, an investor had to pay full application money at the time of submission of the application form. In ASBA, one can make an application for shares without actually parting with the money immediately.
The amount for application money is only blocked in the account of the applicant. The money is debited from the bank account only when the basis of allotment is finalised and also only for number of shares that are finally allotted to the investor. Money blocked under ASBA is unblocked fully or partly as and when the shares are allotted or the issue is withdrawn.
Thus ASBA eliminates problems associated with delay or non-receipt of refunds. Moreover, banks continue to give interest on account as also the money blocked in the account is considered for calculating the average daily / quarterly balances. Thus, investors are saved of hassles on refund deposits while continuing to earn interest on the application money.
Source: sptulsian.com
Earlier while making an application in an IPO, an investor had to pay full application money at the time of submission of the application form. In ASBA, one can make an application for shares without actually parting with the money immediately.
The amount for application money is only blocked in the account of the applicant. The money is debited from the bank account only when the basis of allotment is finalised and also only for number of shares that are finally allotted to the investor. Money blocked under ASBA is unblocked fully or partly as and when the shares are allotted or the issue is withdrawn.
Thus ASBA eliminates problems associated with delay or non-receipt of refunds. Moreover, banks continue to give interest on account as also the money blocked in the account is considered for calculating the average daily / quarterly balances. Thus, investors are saved of hassles on refund deposits while continuing to earn interest on the application money.
Source: sptulsian.com
QWhat is ‘IPO Grading’?
A
IPO grading is the grade
assigned by a Credit Rating Agency registered with SEBI, to the initial public
offering (IPO) of equity shares or any other security which may be converted
into or exchanged with equity shares at a later date. The grade represents a
relative assessment of the fundamentals of that issue in relation to the other
listed equity securities in India. Such grading is generally assigned on a
five-point point scale with a higher score indicating stronger fundamentals and
vice versa as below.
IPO grade 1: Poor fundamentals
IPO grade 2: Below-average fundamentals
IPO grade 3: Average fundamentals
IPO grade 4: Above-average fundamentals
IPO grade 5: Strong fundamentals
IPO grading has been introduced as an endeavor to make additional information available for the investors in order to facilitate their assessment of equity issues offered through an IPO
IPO grade 1: Poor fundamentals
IPO grade 2: Below-average fundamentals
IPO grade 3: Average fundamentals
IPO grade 4: Above-average fundamentals
IPO grade 5: Strong fundamentals
IPO grading has been introduced as an endeavor to make additional information available for the investors in order to facilitate their assessment of equity issues offered through an IPO
QWho is eligible for
reservation and how much? (QIBs, NIIs, etc.,)?
A
In a book built issue
allocation to Retail Individual Investors (RIIs), Non Institutional Investors
(NIIs) and Qualified Institutional Buyers (QIBs) is in the ratio of 35: 15: 50
respectively. In case the book built issues are made pursuant to the
requirement of mandatory allocation of 60% to QIBs in terms of Rule 19(2)(b) of
SCRR, the respective figures are 30% for RIIs and 10% for NIIs. This is a
transitory provision pending harmonization of the QIB allocation in terms of
the aforesaid Rule with that specified in the guidelines.
QWho is Qualified
Institutional Buyer (QIBs)?
A
Qualified Institutional
Buyers are those institutional investors who are generally perceived to possess
expertise and the financial muscle to evaluate and invest in the capital
markets. In terms of clause 2.2.2B (v) of DIP Guidelines, a ‘Qualified
Institutional Buyer’ shall mean:
a. Public financial institution as defined in section 4A of theCompanies 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.
g. Foreign Venture capital investors registered with SEBI.
h. State Industrial Development Corporations.
i. Insurance Companies registered with the Insurance Regulatoryand Development Authority (IRDA).
j. Provident Funds with minimum corpus of Rs.25 crores
k. Pension Funds with minimum corpus of Rs. 25 crores)
These entities are not required to be registered with SEBI as QIBs. Any entities falling under the categories specified above are considered as QIBs for the purpose of participating in primary issuance process.
a. Public financial institution as defined in section 4A of theCompanies 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.
g. Foreign Venture capital investors registered with SEBI.
h. State Industrial Development Corporations.
i. Insurance Companies registered with the Insurance Regulatoryand Development Authority (IRDA).
j. Provident Funds with minimum corpus of Rs.25 crores
k. Pension Funds with minimum corpus of Rs. 25 crores)
These entities are not required to be registered with SEBI as QIBs. Any entities falling under the categories specified above are considered as QIBs for the purpose of participating in primary issuance process.
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