Description
the merchant banking, SEBI guidelines for merchant bankers. It explains merchant banking activities with the help of Adani Power IPO including pre and post issue activities
Merchant Banking
Contents
• SEBI guidelines for merchant bankers • Issue Management-Equity Issue (Adani Power Limited) • Pre and Post Issue Activities
Definition
According to SEBI Merchant Bankers Regulations 1992, Merchant Banker means any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities or acting as manager, consultant, adviser or rendering corporate advisory service in relation to such issue management.
Registration of Merchant Bankers
An application by a person for grant of a certificate shall be made to the Board for any one of the following categories of the merchant banker namely: Category I 1. To carry on any activity of the issue management, which will, inter alia, consist of preparation of prospectus and other information relating to the issue, determining financial structure, tie up of financiers and final allotment and refund of the subscriptions; and 2. To act as adviser, consultant, manager, underwriter, portfolio manager
• Category II, that is to act as adviser, consultant, co-manager, underwriter, portfolio manager
• Category III, that is to act as underwriter, adviser, consultant to an issue
• Category IV, that is to act only as adviser or consultant to an issue.
**An applicant can carry on the activity as portfolio manager only if he obtains separate certificate of registration under the provisions of the Securities and Exchange Board of India (Portfolio Manager) Regulations, 1993
Consideration of Application
The Board shall take into account for considering the grant of a certificate, all matters which are relevant to the activities relating to merchant banker and in particular the applicant complies with the following requirements, namely :• The applicant shall be a body corporate other than a non-banking financial company as defined under clause (f) of section 45-I of the Reserve Bank of India Act, 1934.
• Provided that the merchant banker who has been granted registration by the Reserve Bank of India to act as a primary or satellite dealer may carry on such activity subject to the condition that it shall not accept or hold public deposit. • The applicant has the necessary infrastructure like adequate office space, equipments, and manpower to effectively discharge his activities • The applicant has in his employment minimum of two persons who have the experience to conduct the business of merchant banker.
• A person directly or indirectly connected with the applicant has not been granted registration by the Board.
• The applicant fulfils the capital adequacy requirement
• The applicant, his partner, director or principal officer is not involved in any litigation connected with the securities market which has an adverse bearing on the business of the applicant
• The applicant, his director, partner or principal officer has not at any time been convicted for any offence involving moral turpitude or has been found guilty of any economic offence. • The applicant has the professional qualification from an institution recognised by the Government in finance, law or business management;
Registration
• The Board, on being satisfied that the applicant is eligible, shall grant a certificate. • On the grant of a certificate the applicant shall be liable to pay the fees in accordance with Schedule II Renewal of certificate • Three months before the expiry of the period of certificate, the merchant banker may, if he so desires, make an application for renewal shall be valid for a period of three years from the date of its issue to the applicant.
Code of Conduct
• A merchant banker shall at all times exercise due diligence, ensure proper care and exercise independent professional judgment to protect interest of investors. • A merchant banker shall ensure that adequate disclosures are made to the investors in a timely manner in accordance with the applicable regulations and guidelines so as to enable them to make a balanced and informed decision. • A merchant banker shall endeavour to ensure that the investors are provided with true and adequate information without making any misleading or exaggerated claims or any misrepresentation and are made aware of the attendant risks before taking any investment decision.
• A merchant banker shall endeavour to ensure that copies of the prospectus, offer document, letter of offer or any other related literature is made available to the investors at the time of issue or the offer. • A merchant banker shall not discriminate amongst its clients, save and except on ethical and commercial considerations. • A merchant banker shall not make any statement, either oral or written, which would misrepresent the services that the merchant banker is capable of performing for any client or has rendered to any client.
• A merchant banker shall put in place a mechanism to resolve any conflict of interest situation that may arise in the conduct of its business or where any conflict of interest arises, shall take reasonable steps to resolve the same in an equitable manner. • A merchant banker shall ensure that any change in registration status/any penal action taken by the Board or any material change in the merchant banker’s financial status, which may adversely affect the interests of clients/investors is promptly informed to the clients and any business remaining outstanding is transferred to another registered intermediary in accordance with any instructions of the affected clients. • A merchant banker shall ensure that the senior management, particularly decision makers have access to all relevant information about the business on a timely basis.
• A merchant banker shall ensure that any change in registration status/any penal action taken by the Board or any material change in the merchant banker’s financial status, which may adversely affect the interests of clients/investors is promptly informed to the clients and any business remaining outstanding is transferred to another registered intermediary in accordance with any instructions of the affected clients.
• A merchant banker shall have internal control procedures and financial and operational capabilities which can be reasonably expected to protect its operations, its clients, investors and other registered entities from financial loss arising from theft, fraud, and other dishonest acts, professional misconduct or omissions.
• A merchant banker shall provide adequate freedom and powers to its compliance officer for the effective discharge of the compliance officer’s duties
• A merchant banker shall ensure that the Board is promptly informed about any action, legal proceedings, etc., initiated against it in respect of material breach or non-compliance by it, of any law, rules, regulations, directions of the Board or of any other regulatory body. • A merchant banker or any of its employees shall not render, directly or indirectly, any investment advice about any security in any publicly accessible media, whether real-time or non-real-time, unless a disclosure of his interest including a long or short position, in the said security has been made, while rendering such advice. • A merchant banker shall ensure that any person it employs or appoints to conduct business is fit and proper and otherwise qualified to act in the capacity so employed or appointed (including having relevant professional training or experience).
• A merchant banker shall be responsible for the Acts or omissions of its employees and agents in respect of the conduct of its business. • A merchant banker shall not divulge to anybody either orally or in writing, directly or indirectly, any confidential information about its clients which has come to its knowledge, without taking prior permission of its clients, except where such disclosures are required to be made in compliance with any law for the time being in force. • A merchant banker shall not be a party to or instrument fora) Creation of false market b) Price rigging or manipulation
Issue Management-Equity Issue
ADANI POWER LIMITED
Adani Power Limited
• The company was incorporated as Adani Power Limited on August 22,1996 as a Public Limited Company.
• The company became a Private limited company on June3,2002 and the
name was changed to Adani Power Private Limited. • The company was again converted to Public limited company on April
12,2007 and a fresh certificate of incorporation was issued by Registrar of
Companies for the name which was again changed to Adani Power Limited through a special resolution at the extra ordinary general meeting on March
28,2007
Promoters
• Mr. Gautam S. Adani • Mr. Rajesh S. Adani
• Adani Enterprises Limited which is a US $ 5 billion company based in Ahmedabad
with interests in ? ? ? ? ? ? ? ? Global trading Development and operation of Ports Establishment of SEZ Oil refining Logistics Gas distribution Power Generation Power Transmission and Power Trading etc.
IPO Offer
• Public Issue of 301,652,031 Equity shares • Face Value Rs.10 each • Price band Rs.90 to Rs.100 per Equity Share • Bid Quantity – Minimum 65 Equity Shares and in Multiples of Equity Shares Thereafter. • Employee Reservation Portion - 8,000,000 Equity Shares of Rs.10 each for eligible
employees.
• Net Issue = Total Issue – Employee Reservation =301,652,031-8,000,000 =293,652,031 Equity Shares
Contd. constitute 13.84% of the post issue Paid Up capital*. • The Issue will
• The Net Issue will constitute 13.47% of the post issue Paid Up capital*.
*The portion of authorized stock that the company has issued and received payment for.
Conditions
• In case of revision in Price Band the bidding period will be extended for 3 additional working days after revision of Price Band subject to the issue period not exceeding 10 working days and this shall be widely disseminated by notification to
? NSE
? BSE ? Issuing Press release
? Indicating the change on website of Global Co-coordinator and Book
Running lead Managers' (GCBRLM) and ? At the terminals of other members of the syndicate.
Contd.
In terms of rule19(2)(b)of the Securities Contracts Regulation Acts
1957(SCRR) • This being An issue of less than 25% of the Post Issue capital, the issue is being made through the 100% Book Building Process wherein at least 60% of the Net Issue shall be allocated on a proportionate basis to QIB Bidders. • 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. • The QIB portion includes Anchor Investor portion as per the SEBI Guidelines.
• If at least 60% of the Net Issue cannot be allocated to QIBs ,than the entire
application money will be refunded forth with.
Contd.
• Not less than 10% of the Net Issue shall be available for allocation on a proportionate basis to Non Institutional Bidders and not less than 30% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, Subject to valid Bids being received at or above the Issue Price • 8 million Equity Shares shall be available for allocation on a proportionate basis to Eligible Employees, Subject to valid Bids being receives at or above the Issue Price.
Listing
• The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on the NSE and the BSE. • The company has received an „in principle? approval from the NSE and the BSE, for the listing of the Equity Shares pursuant to letters dated May 29,2009 and May 18,2009, respectively. • For the purpose of the Issue, the Designated Stock Exchange shall be the BSE.
Disclaimer Clause of SEBI
• SEBI only gives its observations on the offer documents and this doesn't constitute approval of either the issue or the offer document.
Disclaimer Clause of BSE
• It is to be distinctly understood that the permission given by BSE Limited should not be in anyway be deemed or construed that the Red Herring Prospectus has been cleared or approved by BSE Limited nor does it certify the correctness or completeness of any of the contents of the Red Herring Prospectus. The investors are advised to refer to the Red Herring Prospectus for the full text of the Disclaimer clause of the BSE Limited. It is to be distinctly understood that the permission given by BSE to use their network and software of the Online IPO System should not be in any way be deemed or constitute that the compliance with various statutory approved by BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer.
Disclaimer Clause of NSE
• It is to be distinctly understood that the permission given by NSE Limited should not be in anyway be deemed or construed that the offer document has been cleared or approved by NSE Limited nor does it certify the correctness or completeness of any of the contents of the offer document .the investors are advised to refer to the offer document for the full text of the Disclaimer clause of the NSE Limited. It is to be distinctly understood that the permission given by NSE to use their network and software of the Online IPO System should not be in any way be deemed or constitute that the compliance with various statutory and other requirements by Adani Power Limited ,BRLMs, etc. are cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer.
IPO Grading
• This issue has been graded by ICRA Limited as IPO Grade 3, indicating average fundamentals through its letter dated July 2,2009.
Book Running Lead Managers
• • • • • • • • • DSP Merrrill Lynch Limited Enam Securities Private Limited IDFC-SSKI Limited Karvy Computer Share Private Limited JM Financial Consultant Private Limited Kotak Mahindra Capital Company Limited Morgan Stanley India Company Private Limited ICICI Securities Limited SBI Capital Markets Limited
Bankers to the issue and Escrow Collection Banks*
• • • • • • • • • • • • Axis Bank Limited Bank of America HDFC Bank Limited ICICI Bank Limited Kotak Mahindra Bank IDBI Bank Limited Punjab National Bank Standard Chartered Bank State Bank of India HongKong and Shanghai Banking Corporation Limited UCO Bank Yes Bank Limited
*Engaged in activities such as acceptance of applications along with application money from investors in respect of issues of capital and refund of application money
Application Supported by Blocked Amount(ASBA)
• ASBA means “Application Supported by Blocked Amount”. • ASBA is an application containing an authorization to block the application money in the bank account, for subscribing to an issue. • If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.
Conditions
• ASBA investors can apply for an amount can bid at cutoff price with single option as to no. of equity shares bid up to Rs.2,00,000. • Investors shall apply through blocking of funds in a bank account with Self certified Syndicate Bank. • Investors should agree to not revise his/her bid. • This mode of payment is not applicable to applicants bidding under reserved categories.
Thank You
Issue
Issue means an offer of sale or purchase of securities by any body corporate, or by any other person or group of persons on its or his or their behalf, as the case may be, to or from the public, or the holders of securities of such body corporate or person or group of persons through a merchant banker.
BACK
Capital Adequacy Requirement
Category Minimum Amount • Category I *[Rs. 5, 00, 00, 000] • Category II Rs. 50, 00, 000 • Category III Rs. 20, 00, 000 • Category IV Nil
BACK
Schedule II
• Every merchant banker shall pay a sum of ten lakh rupees as registration fees at the time of the grant of certificate by the Board. • A merchant banker to keep registration in force shall pay renewal fee of five lakh rupees every three years from the fourth year from the date of initial registration. • The non-refundable fee payable along with an application for registration an application for renewal of registration shall be a sum of twenty five thousand rupees.
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Underwriting Obligation
• In respect of every issue to be managed, the lead merchant banker holding a certificate under Category I shall accept a minimum underwriting obligation of five per cent of the total underwriting commitment or rupees twenty-five lacs, whichever is less
• Provided that, if the lead merchant banker is unable to accept the minimum underwriting obligation, that lead merchant banker shall make arrangement for having the issue underwritten to that extent by a merchant banker associated with the issue and shall keep the Board informed of such arrangement.
BACK
Appointment of Compliance Officer
• Every merchant banker shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions, etc., issued by the Board or the Central Government and for redressal of investors’ grievances. • The compliance officer shall immediately and independently report to the Board any non-compliance observed by him and ensure that the observations made or deficiencies pointed out by the Board on/in the draft prospectus or the letter of offer as the case may be, do not recur
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ICRA
• ICRA?s Grading of Initial Public Offerings (IPOs) is a service aimed at facilitating assessment of equity issues offered to the public. • An ICRA IPO Grade does not comment on the valuation or pricing of the issue that has been Graded, nor does it seek to indicate the likely returns to shareholders from subscribing to the IPO. The emphasis of the IPO Grading exercise is on evaluating the prospects of the industry in which the company operates. • ICRA?s five point IPO Grading Scale is as follows:
? IPO Grade 5 IPO Grade 4 IPO Grade 3 IPO Grade 2 IPO Grade 1 Strong fundamentals Above-average fundamentals Average fundamentals Below-average fundamentals Poor fundamentals
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Advantages
(i) The investor need not pay the application money by cheque rather the investor submits ASBA which accompanies an authorization to block the bank account to the extent of the application money. (ii) The investor does not have to bother about refunds, as in ASBA only that much money to the extent required for allotment of securities, is taken from the bank account only when his application is selected for allotment after the basis of allotment is finalized. (iii) The investor continues to earn interest on the application money as the same remains in the bank account, which is not the case in other modes of payment. (iv) The application form is simpler. (v) The investor deals with the known intermediary i.e. its own bank.
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Red Herring Prospectus
• "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 the price is not disclosed, the number of shares and the upper and lower price bands are disclosed. On the other hand, an issuer can state the issue size and the number of shares are determined later. • In the case of book-built issues, it is a process of price discovery and the price cannot be determined until the bidding process is completed. Hence, such details are not shown in the Red Herring prospectus filed with the RoC in terms of the provisions of the Companies Act. • Only on completion of the bidding process, the details of the final price are included in the offer document. The offer document filed thereafter with RoC is called a prospectus.
BACK
Bidding period
• The period for which an issue is required to be kept open is: For Fixed price public issues: 3?10 working days For Book built public issues: 3?7 working days extendable by 3 days in case of a revision in the price band For Rights issues: 15?30 days.
BACK
• Book Running Lead Manager
In case of book building process the lead merchant bankers appointed by the Issuer Company are referred to as the Book Running Lead Managers because they also helps determine the price band.
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Qualified Institutional Buyers
• A purchaser of securities that is deemed financially sophisticated and is legally recognized by security market regulators to need less protection from issuers than most public investors. Typically, the qualifications for this designation are based on an investor's total assets under management.
a) Public financial institution as defined in section 4A of the Companies 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 Regulatory and Development Authority (IRDA). j) Provident Funds with minimum corpus of Rs.25 crore k) Pension Funds with minimum corpus of Rs. 25 crore
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Retail Individual Investor (RII)
In retail individual investor category, investors can not apply for more then Rs one lakh (Rs 2,00,000) in an IPO. Retail Individual investors have an allocation of 35% of shares of the total issue size in Book Build IPO's. NRI's who apply with less then Rs 2,00,000 /- are also considered as RII category.
Non Institutional Bidders
Individual investors, NRI's, companies, trusts etc who bid for more then Rs 1 lakhs are known as Non-institutional bidders. They need not to register with SEBI like RII's. Non-institutional bidders have an allocation of 15% of shares of the total issue size in Book Build IPO's.
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doc_557592992.ppt
the merchant banking, SEBI guidelines for merchant bankers. It explains merchant banking activities with the help of Adani Power IPO including pre and post issue activities
Merchant Banking
Contents
• SEBI guidelines for merchant bankers • Issue Management-Equity Issue (Adani Power Limited) • Pre and Post Issue Activities
Definition
According to SEBI Merchant Bankers Regulations 1992, Merchant Banker means any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities or acting as manager, consultant, adviser or rendering corporate advisory service in relation to such issue management.
Registration of Merchant Bankers
An application by a person for grant of a certificate shall be made to the Board for any one of the following categories of the merchant banker namely: Category I 1. To carry on any activity of the issue management, which will, inter alia, consist of preparation of prospectus and other information relating to the issue, determining financial structure, tie up of financiers and final allotment and refund of the subscriptions; and 2. To act as adviser, consultant, manager, underwriter, portfolio manager
• Category II, that is to act as adviser, consultant, co-manager, underwriter, portfolio manager
• Category III, that is to act as underwriter, adviser, consultant to an issue
• Category IV, that is to act only as adviser or consultant to an issue.
**An applicant can carry on the activity as portfolio manager only if he obtains separate certificate of registration under the provisions of the Securities and Exchange Board of India (Portfolio Manager) Regulations, 1993
Consideration of Application
The Board shall take into account for considering the grant of a certificate, all matters which are relevant to the activities relating to merchant banker and in particular the applicant complies with the following requirements, namely :• The applicant shall be a body corporate other than a non-banking financial company as defined under clause (f) of section 45-I of the Reserve Bank of India Act, 1934.
• Provided that the merchant banker who has been granted registration by the Reserve Bank of India to act as a primary or satellite dealer may carry on such activity subject to the condition that it shall not accept or hold public deposit. • The applicant has the necessary infrastructure like adequate office space, equipments, and manpower to effectively discharge his activities • The applicant has in his employment minimum of two persons who have the experience to conduct the business of merchant banker.
• A person directly or indirectly connected with the applicant has not been granted registration by the Board.
• The applicant fulfils the capital adequacy requirement
• The applicant, his partner, director or principal officer is not involved in any litigation connected with the securities market which has an adverse bearing on the business of the applicant
• The applicant, his director, partner or principal officer has not at any time been convicted for any offence involving moral turpitude or has been found guilty of any economic offence. • The applicant has the professional qualification from an institution recognised by the Government in finance, law or business management;
Registration
• The Board, on being satisfied that the applicant is eligible, shall grant a certificate. • On the grant of a certificate the applicant shall be liable to pay the fees in accordance with Schedule II Renewal of certificate • Three months before the expiry of the period of certificate, the merchant banker may, if he so desires, make an application for renewal shall be valid for a period of three years from the date of its issue to the applicant.
Code of Conduct
• A merchant banker shall at all times exercise due diligence, ensure proper care and exercise independent professional judgment to protect interest of investors. • A merchant banker shall ensure that adequate disclosures are made to the investors in a timely manner in accordance with the applicable regulations and guidelines so as to enable them to make a balanced and informed decision. • A merchant banker shall endeavour to ensure that the investors are provided with true and adequate information without making any misleading or exaggerated claims or any misrepresentation and are made aware of the attendant risks before taking any investment decision.
• A merchant banker shall endeavour to ensure that copies of the prospectus, offer document, letter of offer or any other related literature is made available to the investors at the time of issue or the offer. • A merchant banker shall not discriminate amongst its clients, save and except on ethical and commercial considerations. • A merchant banker shall not make any statement, either oral or written, which would misrepresent the services that the merchant banker is capable of performing for any client or has rendered to any client.
• A merchant banker shall put in place a mechanism to resolve any conflict of interest situation that may arise in the conduct of its business or where any conflict of interest arises, shall take reasonable steps to resolve the same in an equitable manner. • A merchant banker shall ensure that any change in registration status/any penal action taken by the Board or any material change in the merchant banker’s financial status, which may adversely affect the interests of clients/investors is promptly informed to the clients and any business remaining outstanding is transferred to another registered intermediary in accordance with any instructions of the affected clients. • A merchant banker shall ensure that the senior management, particularly decision makers have access to all relevant information about the business on a timely basis.
• A merchant banker shall ensure that any change in registration status/any penal action taken by the Board or any material change in the merchant banker’s financial status, which may adversely affect the interests of clients/investors is promptly informed to the clients and any business remaining outstanding is transferred to another registered intermediary in accordance with any instructions of the affected clients.
• A merchant banker shall have internal control procedures and financial and operational capabilities which can be reasonably expected to protect its operations, its clients, investors and other registered entities from financial loss arising from theft, fraud, and other dishonest acts, professional misconduct or omissions.
• A merchant banker shall provide adequate freedom and powers to its compliance officer for the effective discharge of the compliance officer’s duties
• A merchant banker shall ensure that the Board is promptly informed about any action, legal proceedings, etc., initiated against it in respect of material breach or non-compliance by it, of any law, rules, regulations, directions of the Board or of any other regulatory body. • A merchant banker or any of its employees shall not render, directly or indirectly, any investment advice about any security in any publicly accessible media, whether real-time or non-real-time, unless a disclosure of his interest including a long or short position, in the said security has been made, while rendering such advice. • A merchant banker shall ensure that any person it employs or appoints to conduct business is fit and proper and otherwise qualified to act in the capacity so employed or appointed (including having relevant professional training or experience).
• A merchant banker shall be responsible for the Acts or omissions of its employees and agents in respect of the conduct of its business. • A merchant banker shall not divulge to anybody either orally or in writing, directly or indirectly, any confidential information about its clients which has come to its knowledge, without taking prior permission of its clients, except where such disclosures are required to be made in compliance with any law for the time being in force. • A merchant banker shall not be a party to or instrument fora) Creation of false market b) Price rigging or manipulation
Issue Management-Equity Issue
ADANI POWER LIMITED
Adani Power Limited
• The company was incorporated as Adani Power Limited on August 22,1996 as a Public Limited Company.
• The company became a Private limited company on June3,2002 and the
name was changed to Adani Power Private Limited. • The company was again converted to Public limited company on April
12,2007 and a fresh certificate of incorporation was issued by Registrar of
Companies for the name which was again changed to Adani Power Limited through a special resolution at the extra ordinary general meeting on March
28,2007
Promoters
• Mr. Gautam S. Adani • Mr. Rajesh S. Adani
• Adani Enterprises Limited which is a US $ 5 billion company based in Ahmedabad
with interests in ? ? ? ? ? ? ? ? Global trading Development and operation of Ports Establishment of SEZ Oil refining Logistics Gas distribution Power Generation Power Transmission and Power Trading etc.
IPO Offer
• Public Issue of 301,652,031 Equity shares • Face Value Rs.10 each • Price band Rs.90 to Rs.100 per Equity Share • Bid Quantity – Minimum 65 Equity Shares and in Multiples of Equity Shares Thereafter. • Employee Reservation Portion - 8,000,000 Equity Shares of Rs.10 each for eligible
employees.
• Net Issue = Total Issue – Employee Reservation =301,652,031-8,000,000 =293,652,031 Equity Shares
Contd. constitute 13.84% of the post issue Paid Up capital*. • The Issue will
• The Net Issue will constitute 13.47% of the post issue Paid Up capital*.
*The portion of authorized stock that the company has issued and received payment for.
Conditions
• In case of revision in Price Band the bidding period will be extended for 3 additional working days after revision of Price Band subject to the issue period not exceeding 10 working days and this shall be widely disseminated by notification to
? NSE
? BSE ? Issuing Press release
? Indicating the change on website of Global Co-coordinator and Book
Running lead Managers' (GCBRLM) and ? At the terminals of other members of the syndicate.
Contd.
In terms of rule19(2)(b)of the Securities Contracts Regulation Acts
1957(SCRR) • This being An issue of less than 25% of the Post Issue capital, the issue is being made through the 100% Book Building Process wherein at least 60% of the Net Issue shall be allocated on a proportionate basis to QIB Bidders. • 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. • The QIB portion includes Anchor Investor portion as per the SEBI Guidelines.
• If at least 60% of the Net Issue cannot be allocated to QIBs ,than the entire
application money will be refunded forth with.
Contd.
• Not less than 10% of the Net Issue shall be available for allocation on a proportionate basis to Non Institutional Bidders and not less than 30% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, Subject to valid Bids being received at or above the Issue Price • 8 million Equity Shares shall be available for allocation on a proportionate basis to Eligible Employees, Subject to valid Bids being receives at or above the Issue Price.
Listing
• The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on the NSE and the BSE. • The company has received an „in principle? approval from the NSE and the BSE, for the listing of the Equity Shares pursuant to letters dated May 29,2009 and May 18,2009, respectively. • For the purpose of the Issue, the Designated Stock Exchange shall be the BSE.
Disclaimer Clause of SEBI
• SEBI only gives its observations on the offer documents and this doesn't constitute approval of either the issue or the offer document.
Disclaimer Clause of BSE
• It is to be distinctly understood that the permission given by BSE Limited should not be in anyway be deemed or construed that the Red Herring Prospectus has been cleared or approved by BSE Limited nor does it certify the correctness or completeness of any of the contents of the Red Herring Prospectus. The investors are advised to refer to the Red Herring Prospectus for the full text of the Disclaimer clause of the BSE Limited. It is to be distinctly understood that the permission given by BSE to use their network and software of the Online IPO System should not be in any way be deemed or constitute that the compliance with various statutory approved by BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer.
Disclaimer Clause of NSE
• It is to be distinctly understood that the permission given by NSE Limited should not be in anyway be deemed or construed that the offer document has been cleared or approved by NSE Limited nor does it certify the correctness or completeness of any of the contents of the offer document .the investors are advised to refer to the offer document for the full text of the Disclaimer clause of the NSE Limited. It is to be distinctly understood that the permission given by NSE to use their network and software of the Online IPO System should not be in any way be deemed or constitute that the compliance with various statutory and other requirements by Adani Power Limited ,BRLMs, etc. are cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer.
IPO Grading
• This issue has been graded by ICRA Limited as IPO Grade 3, indicating average fundamentals through its letter dated July 2,2009.
Book Running Lead Managers
• • • • • • • • • DSP Merrrill Lynch Limited Enam Securities Private Limited IDFC-SSKI Limited Karvy Computer Share Private Limited JM Financial Consultant Private Limited Kotak Mahindra Capital Company Limited Morgan Stanley India Company Private Limited ICICI Securities Limited SBI Capital Markets Limited
Bankers to the issue and Escrow Collection Banks*
• • • • • • • • • • • • Axis Bank Limited Bank of America HDFC Bank Limited ICICI Bank Limited Kotak Mahindra Bank IDBI Bank Limited Punjab National Bank Standard Chartered Bank State Bank of India HongKong and Shanghai Banking Corporation Limited UCO Bank Yes Bank Limited
*Engaged in activities such as acceptance of applications along with application money from investors in respect of issues of capital and refund of application money
Application Supported by Blocked Amount(ASBA)
• ASBA means “Application Supported by Blocked Amount”. • ASBA is an application containing an authorization to block the application money in the bank account, for subscribing to an issue. • If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.
Conditions
• ASBA investors can apply for an amount can bid at cutoff price with single option as to no. of equity shares bid up to Rs.2,00,000. • Investors shall apply through blocking of funds in a bank account with Self certified Syndicate Bank. • Investors should agree to not revise his/her bid. • This mode of payment is not applicable to applicants bidding under reserved categories.
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Issue
Issue means an offer of sale or purchase of securities by any body corporate, or by any other person or group of persons on its or his or their behalf, as the case may be, to or from the public, or the holders of securities of such body corporate or person or group of persons through a merchant banker.
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Capital Adequacy Requirement
Category Minimum Amount • Category I *[Rs. 5, 00, 00, 000] • Category II Rs. 50, 00, 000 • Category III Rs. 20, 00, 000 • Category IV Nil
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Schedule II
• Every merchant banker shall pay a sum of ten lakh rupees as registration fees at the time of the grant of certificate by the Board. • A merchant banker to keep registration in force shall pay renewal fee of five lakh rupees every three years from the fourth year from the date of initial registration. • The non-refundable fee payable along with an application for registration an application for renewal of registration shall be a sum of twenty five thousand rupees.
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Underwriting Obligation
• In respect of every issue to be managed, the lead merchant banker holding a certificate under Category I shall accept a minimum underwriting obligation of five per cent of the total underwriting commitment or rupees twenty-five lacs, whichever is less
• Provided that, if the lead merchant banker is unable to accept the minimum underwriting obligation, that lead merchant banker shall make arrangement for having the issue underwritten to that extent by a merchant banker associated with the issue and shall keep the Board informed of such arrangement.
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Appointment of Compliance Officer
• Every merchant banker shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions, etc., issued by the Board or the Central Government and for redressal of investors’ grievances. • The compliance officer shall immediately and independently report to the Board any non-compliance observed by him and ensure that the observations made or deficiencies pointed out by the Board on/in the draft prospectus or the letter of offer as the case may be, do not recur
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ICRA
• ICRA?s Grading of Initial Public Offerings (IPOs) is a service aimed at facilitating assessment of equity issues offered to the public. • An ICRA IPO Grade does not comment on the valuation or pricing of the issue that has been Graded, nor does it seek to indicate the likely returns to shareholders from subscribing to the IPO. The emphasis of the IPO Grading exercise is on evaluating the prospects of the industry in which the company operates. • ICRA?s five point IPO Grading Scale is as follows:
? IPO Grade 5 IPO Grade 4 IPO Grade 3 IPO Grade 2 IPO Grade 1 Strong fundamentals Above-average fundamentals Average fundamentals Below-average fundamentals Poor fundamentals
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Advantages
(i) The investor need not pay the application money by cheque rather the investor submits ASBA which accompanies an authorization to block the bank account to the extent of the application money. (ii) The investor does not have to bother about refunds, as in ASBA only that much money to the extent required for allotment of securities, is taken from the bank account only when his application is selected for allotment after the basis of allotment is finalized. (iii) The investor continues to earn interest on the application money as the same remains in the bank account, which is not the case in other modes of payment. (iv) The application form is simpler. (v) The investor deals with the known intermediary i.e. its own bank.
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Red Herring Prospectus
• "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 the price is not disclosed, the number of shares and the upper and lower price bands are disclosed. On the other hand, an issuer can state the issue size and the number of shares are determined later. • In the case of book-built issues, it is a process of price discovery and the price cannot be determined until the bidding process is completed. Hence, such details are not shown in the Red Herring prospectus filed with the RoC in terms of the provisions of the Companies Act. • Only on completion of the bidding process, the details of the final price are included in the offer document. The offer document filed thereafter with RoC is called a prospectus.
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Bidding period
• The period for which an issue is required to be kept open is: For Fixed price public issues: 3?10 working days For Book built public issues: 3?7 working days extendable by 3 days in case of a revision in the price band For Rights issues: 15?30 days.
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• Book Running Lead Manager
In case of book building process the lead merchant bankers appointed by the Issuer Company are referred to as the Book Running Lead Managers because they also helps determine the price band.
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Qualified Institutional Buyers
• A purchaser of securities that is deemed financially sophisticated and is legally recognized by security market regulators to need less protection from issuers than most public investors. Typically, the qualifications for this designation are based on an investor's total assets under management.
a) Public financial institution as defined in section 4A of the Companies 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 Regulatory and Development Authority (IRDA). j) Provident Funds with minimum corpus of Rs.25 crore k) Pension Funds with minimum corpus of Rs. 25 crore
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Retail Individual Investor (RII)
In retail individual investor category, investors can not apply for more then Rs one lakh (Rs 2,00,000) in an IPO. Retail Individual investors have an allocation of 35% of shares of the total issue size in Book Build IPO's. NRI's who apply with less then Rs 2,00,000 /- are also considered as RII category.
Non Institutional Bidders
Individual investors, NRI's, companies, trusts etc who bid for more then Rs 1 lakhs are known as Non-institutional bidders. They need not to register with SEBI like RII's. Non-institutional bidders have an allocation of 15% of shares of the total issue size in Book Build IPO's.
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