Description
This is a presentation explains what is merchant banking and scope of activities carried out under the umbrella of merchant banking.
Merchant Banking in India – a Bird’s Eye View
Synopsis
?
?
?
?
?
? ?
Scope of Merchant Banking; Structure of Merchant Banking industry- Current Developments in Merchant Banking in India and abroad-Primary MarketsSROsUnderwriting- Pricing of Capital Issues-Marketing of Capital IssuesOther services rendered by Merchant bankersCorporate Advisory Services--Loan SyndicationMergers & acquisitionsCode of Conduct for Merchant Bankers. Regulation of Merchant Banking activity in India.
The Indian Capital Market
Merchant Banking Activities
Merchant Banker
Advisory
Market Operations
Issue Management
Non Fund Financial Services
Merchant Banking Advisory
Counseling
Capital Structuring
Project Appraisal
Issue Evaluation and Counseling
Market Operations
Operations Connected with
Takeovers
Buyback
Delisting
Market making
Issue Management
Lead Management
Equity
Debt
IPOs
FPOs
Bonds & Debentures
Structured Debt Products
Rights Issues
Offers for Sale
Financial Services (Non Fund)
Resource Mobilisation
Project Report
Project Appraisal
Loan Syndication
Structuring Financial Products
Private Placement (Debt & Equity)
Issue Management
? Pre Issue Obligations
? Inter-se Allocation of Duties
? Post Issue Obligations ? Difference between Public and Rights Issues
Underwriting
? Transition from Fee Based to Fund Based
? Precautions while underwriting
? SEBI Regulations ? The Future of underwriting
Mergers and Takeovers
? Corporate Proliferation leading to Mergers
and Takeovers ? Types of Mergers ? Types of Takeovers ? Role of Merchant Banker in Takeovers ? The Takeover Code 1997
Buy Back of Shares
? Amendments to Company Law
? Roll of Merchant Banker
? Buy Back Routes
?
?
By Tender From Open Market
SEBI’s Regulatory Framework -I
? SEBI Guidelines for Disclosure and Investor
Protection ? SEBI (Stock Brokers/Sub Brokers) Regulation1992 ? SEBI (Insider Trading) Regulations 1992 ? SEBI (Merchant Bankers) Regulations 1992 ? SEBI (Portfolio Managers) Regulations 1993 ? SEBI (Mutual Funds) Regulations 1993
SEBI’s Regulatory Framework - II
? SEBI (Registrars to an Issue and Transfer
Agents) Regulations 1993 ? SEBI (Underwriters )Regulations 1993 ? SEBI (Debenture trustees) Regulations 1993 ? SEBI (Bankers to an Issue) Regulations 1994 ? SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 ? SEBI (Buy Back of Securities) Regulations 1998
An Introduction to BOOK BUILDING
15
Prewriting
? Underwriting
? Evolution of Prewriting
? Transition of Prewriting into Book Building
Empowerment of a Decontrolled Market
? Risks involved in ? ? ?
?
Greenfield Issues Misuse of Institutional Appraisal Mechanism Assessment of the Intrinsic Value of a scrip Market Appraisal and Price Discovery Market Empowerment
Institutional Leveraging
? Transition from a retail
base to an institutional base ? Institutions better equipped to analyse the worth of scrip ? Issue fails if QIBs do not subscribe 60% ? Risk to Retail investor reduced
The Intermediaries
? Book Running Lead ? ? ? ? ?
Manager Syndicate Member Sub-Syndicate Member Registrar Escrow Banker (optional) QIBs
Market Appraisal
? Investment Appetite is
Dependent on the following
?
?
? ? ? ?
Alternate Investment Avenues Market Sentiments Industry Specific Factors Company Specific Factors Liquidity Position of the Institutions Portfolio Position of the Institutions
Price Discovery
? Book Built portion is ? ?
?
?
kept open for ordering BRLM keeps the Book Ascertainment of the Optimum price at which the issue quantum is met BRLM and the company decide the optimum price The Discovered (Cut Off) Price is announced
The Issue Schedule
? Book Built (Placement) Portion
Preparation of Red Herring ? Filing with SEBI without Price/Quantum ? Ascertainment of Market Appetite ? Bidding, Price Discovery ? Allocation ? Underwriting ? Filing with ROC ? Net Offer to the Public Portion ? Allotment/Refund
?
Running the Book
? Ascertaining the Market ? ? ? ?
Appetite Indicative Price Banding Collection of Bids Updating the book by BRLM Price Discovery
Allocation Vs Allotment
Book Building
Collection of Bid amount
Price Discovery
Allocation
Issue of Confirmation of Allocation Note
Refund of Excess bid amounts
Filing of Prospectus with ROC
Deemed Allotment
Fixed Price Issue
Escrow Mechanism
? Escrow banker may be appointed
? SEBI Guidelines do not require this
? The upfront margin decided by the BRLM ? The balance of money to be paid by the
bidder on allocation ? Refund of excess application money after allotment
Bidding Process
Bidding Opens
Submissions of bids by the bidders Acceptance by the Syndicate member Real-time display of demand depth Revision of Bids Allocation Refund of excess bid amounts Listing at stock exchange Registration with a specific terminal Acknowledgement of Bids Payment to escrow account Price Discovery Issue of CAN Allotment Trading
Process Flow
Applications
Syndicate member
Banking of app.
Bank
Investor
DP
F o r w a r d
NSE/ BSE REGISTRAR
DEPOSITORY
Allocation process
BRLM
The Critical Path
Sequence of events
Due Diligence exercise Filing of Draft Red Herring Prospectus with SEBI Bidding Process Price Discovery & Allocation
Filing of Prospectus with ROC
Refund of excess order money Public offer at the discovered price Allotment & Listing
The Technology Interface
? Network Connectivity
?
? ?
?
between Syndicate Member & Exchanges providing the bidding facility Online Electronic Bidding Facility Real-time Demand Position Online Revision of Bids Automatic Generation of Transaction Registration Slips
The Odds
? Heavy Dependence on Institutional Investing
? Retail Base will be reduced
? Wide- Holding Restricted ? Wholesale Marketing Required
The Evens
? Failure of Issue is Ruled Out
? Market Determined Optimum Pricing
? Justifiable Scrip Valuation ? Servicing of Members Easier in the
Wholesale Segment ? Quicker Issue Process ? Transparent Dealings
doc_969607998.ppt
This is a presentation explains what is merchant banking and scope of activities carried out under the umbrella of merchant banking.
Merchant Banking in India – a Bird’s Eye View
Synopsis
?
?
?
?
?
? ?
Scope of Merchant Banking; Structure of Merchant Banking industry- Current Developments in Merchant Banking in India and abroad-Primary MarketsSROsUnderwriting- Pricing of Capital Issues-Marketing of Capital IssuesOther services rendered by Merchant bankersCorporate Advisory Services--Loan SyndicationMergers & acquisitionsCode of Conduct for Merchant Bankers. Regulation of Merchant Banking activity in India.
The Indian Capital Market
Merchant Banking Activities
Merchant Banker
Advisory
Market Operations
Issue Management
Non Fund Financial Services
Merchant Banking Advisory
Counseling
Capital Structuring
Project Appraisal
Issue Evaluation and Counseling
Market Operations
Operations Connected with
Takeovers
Buyback
Delisting
Market making
Issue Management
Lead Management
Equity
Debt
IPOs
FPOs
Bonds & Debentures
Structured Debt Products
Rights Issues
Offers for Sale
Financial Services (Non Fund)
Resource Mobilisation
Project Report
Project Appraisal
Loan Syndication
Structuring Financial Products
Private Placement (Debt & Equity)
Issue Management
? Pre Issue Obligations
? Inter-se Allocation of Duties
? Post Issue Obligations ? Difference between Public and Rights Issues
Underwriting
? Transition from Fee Based to Fund Based
? Precautions while underwriting
? SEBI Regulations ? The Future of underwriting
Mergers and Takeovers
? Corporate Proliferation leading to Mergers
and Takeovers ? Types of Mergers ? Types of Takeovers ? Role of Merchant Banker in Takeovers ? The Takeover Code 1997
Buy Back of Shares
? Amendments to Company Law
? Roll of Merchant Banker
? Buy Back Routes
?
?
By Tender From Open Market
SEBI’s Regulatory Framework -I
? SEBI Guidelines for Disclosure and Investor
Protection ? SEBI (Stock Brokers/Sub Brokers) Regulation1992 ? SEBI (Insider Trading) Regulations 1992 ? SEBI (Merchant Bankers) Regulations 1992 ? SEBI (Portfolio Managers) Regulations 1993 ? SEBI (Mutual Funds) Regulations 1993
SEBI’s Regulatory Framework - II
? SEBI (Registrars to an Issue and Transfer
Agents) Regulations 1993 ? SEBI (Underwriters )Regulations 1993 ? SEBI (Debenture trustees) Regulations 1993 ? SEBI (Bankers to an Issue) Regulations 1994 ? SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 ? SEBI (Buy Back of Securities) Regulations 1998
An Introduction to BOOK BUILDING
15
Prewriting
? Underwriting
? Evolution of Prewriting
? Transition of Prewriting into Book Building
Empowerment of a Decontrolled Market
? Risks involved in ? ? ?
?
Greenfield Issues Misuse of Institutional Appraisal Mechanism Assessment of the Intrinsic Value of a scrip Market Appraisal and Price Discovery Market Empowerment
Institutional Leveraging
? Transition from a retail
base to an institutional base ? Institutions better equipped to analyse the worth of scrip ? Issue fails if QIBs do not subscribe 60% ? Risk to Retail investor reduced
The Intermediaries
? Book Running Lead ? ? ? ? ?
Manager Syndicate Member Sub-Syndicate Member Registrar Escrow Banker (optional) QIBs
Market Appraisal
? Investment Appetite is
Dependent on the following
?
?
? ? ? ?
Alternate Investment Avenues Market Sentiments Industry Specific Factors Company Specific Factors Liquidity Position of the Institutions Portfolio Position of the Institutions
Price Discovery
? Book Built portion is ? ?
?
?
kept open for ordering BRLM keeps the Book Ascertainment of the Optimum price at which the issue quantum is met BRLM and the company decide the optimum price The Discovered (Cut Off) Price is announced
The Issue Schedule
? Book Built (Placement) Portion
Preparation of Red Herring ? Filing with SEBI without Price/Quantum ? Ascertainment of Market Appetite ? Bidding, Price Discovery ? Allocation ? Underwriting ? Filing with ROC ? Net Offer to the Public Portion ? Allotment/Refund
?
Running the Book
? Ascertaining the Market ? ? ? ?
Appetite Indicative Price Banding Collection of Bids Updating the book by BRLM Price Discovery
Allocation Vs Allotment
Book Building
Collection of Bid amount
Price Discovery
Allocation
Issue of Confirmation of Allocation Note
Refund of Excess bid amounts
Filing of Prospectus with ROC
Deemed Allotment
Fixed Price Issue
Escrow Mechanism
? Escrow banker may be appointed
? SEBI Guidelines do not require this
? The upfront margin decided by the BRLM ? The balance of money to be paid by the
bidder on allocation ? Refund of excess application money after allotment
Bidding Process
Bidding Opens
Submissions of bids by the bidders Acceptance by the Syndicate member Real-time display of demand depth Revision of Bids Allocation Refund of excess bid amounts Listing at stock exchange Registration with a specific terminal Acknowledgement of Bids Payment to escrow account Price Discovery Issue of CAN Allotment Trading
Process Flow
Applications
Syndicate member
Banking of app.
Bank
Investor
DP
F o r w a r d
NSE/ BSE REGISTRAR
DEPOSITORY
Allocation process
BRLM
The Critical Path
Sequence of events
Due Diligence exercise Filing of Draft Red Herring Prospectus with SEBI Bidding Process Price Discovery & Allocation
Filing of Prospectus with ROC
Refund of excess order money Public offer at the discovered price Allotment & Listing
The Technology Interface
? Network Connectivity
?
? ?
?
between Syndicate Member & Exchanges providing the bidding facility Online Electronic Bidding Facility Real-time Demand Position Online Revision of Bids Automatic Generation of Transaction Registration Slips
The Odds
? Heavy Dependence on Institutional Investing
? Retail Base will be reduced
? Wide- Holding Restricted ? Wholesale Marketing Required
The Evens
? Failure of Issue is Ruled Out
? Market Determined Optimum Pricing
? Justifiable Scrip Valuation ? Servicing of Members Easier in the
Wholesale Segment ? Quicker Issue Process ? Transparent Dealings
doc_969607998.ppt