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Exchange of Ideas 3
Citation preview
11
Public Offer of Securities and IPOs
2
1• Overview of Securities Market
2• Overview of Initial Public Offer
3• Offer For Sale
4• Acquisition Window
5• Statistics
Agenda
2
Exchange of Ideas
3
Purpose of Stock Exchanges
4
Stock Exchange
Allow companies to raise equity from investors and for investors
to invest in good companiesProvide investors a market to
buy and sell securities
Primary Market Secondary Market
Trading Process
5
Seller Buyer
BrokerBroker
Exchange
Bank Clearing Corporation Depository
1
2 2
3
44
3
6 6
7 71
5
The clearing banks and the depositories provide the necessary interface between the custodians/clearing members for settlement of funds and securities obligations of trading members
Clearing and Settlement - Purpose
6
To determine funds and securities obligations of the trading members
To settle the trade through exchange’s robust settlement process
Clearing and Settlement Process
7
Exchange
Clearing Corporation
Depository
Clearing Bank
Custodian / CM
1
32
4 11
6
8 9
7
10 5
T+2 Rolling Settlement – T+1 activities
8
Confirmation of the institutional trades. Provision of exception window available for late confirmations. Time limit and the additional charges for the exception window to be decided by exchanges.
The exchanges / Clearing House / Clearing Corporation process and download obligation files to the brokers’ terminals
DPs accepts instructions for pay-in of securities by the investors in physical form at least upto 4 p.m. and in electronic form by 6 p.m.
The depositories accept the requests from DPs for ‘same day processing’.
T+2 Rolling Settlement – T+2 activities
9
Depository permits downloading of the pay-in files of securities and funds from broker pool accounts
Depository processes pay-in requests and transfers the consolidated pay-in files to the Clearing Corporation
The Exchanges / Clearing Corporation execute pay-out of securities and funds to the Depositories and Clearing Banks
Depositories and the Clearing Banks complete the process by 2:00 p.m.
Overview of Regulatory Framework
10
SCRA And Rules SEBI Act Stock Exchange Requirement Companies Act
SEBI(ICDR) Regulations
Syndicate Member
Underwriter
Registrar to Issue
Depositories
Company/Issuer to initiate process
Preparation of Prospectus and due diligence by Merchant Banker
Checking compliances and in-principle approval by BSE
Go ahead by SEBI
Engagement of various Intermediaries to fulfill
various obligation
Old Process of Initial Public Offer (T + 60 days)
11
Company
Exchange
Investor
RTA
Bank
1
2
345
1. Investor submits application and cheque
2. Application checked and basis done
3. Application sent to exchange for registration
4. Draw list of allotees, allotment letters, share certificates
5. Allottee approval
6. Company issues shares
7. Capital transferred to company and shares transferred to investors along with capital for unallotted shares
7
6
7
7
Initial Public Offer Issue Process (T + 12 days)
12
Grading Agency
Syndicate Bank
Broker
Legal Counsel
Regulator
Lead Manager
Exchange
Escrow Bank
Syndicate Member
Depository
RTA
1
23
5
9
6
4
10
2
2
3
5
6
7
8
9
10 5
5
Company Investor
Streamlining Initial Public Offer Issue Process (T + 6 days)
13
Grading Agency
SCSB (ASBA)
DP/RTA/BROKER
Legal Counsel
Regulator
Lead Manager
Exchange
Escrow Bank
Syndicate Member
Depository
RTA
1
23
5
9
6
4
10
2
2
3
5
6
7
8
9
10 5
5
Company Investor
Day Activity
T+1 Registrar to get the electronic bid details from the stock exchanges
by end of the day and give to SCSB SCSBs to continue / begin blocking of funds
T+2
Issuer, merchant banker and registrar submit relevant documents to stock exchange(s)
SCSBs send confirmation of funds blocked to registrar Registrar reconciles compiled data from the stock exchange(s) and
SCSBs
T+3
Registrar to finalize basis of allotment and submit to designated stock exchange (DSE) for approval.
Designated Stock Exchange(s) to approve the basis of allotment Registrar to prepare funds transfer schedule and issue funds
transfer instructions to SCSBs
Streamlining Initial Public Offer Issue Process – Day wise activity
14
Day Activity
T+4
SCSBs credit funds in public issue account of the issuer who allotment.
Registrar/Issuer initiates corporate action for credit of shares to allottees.
Issuer and registrar file allotment details with DSE Registrar sends bank-wise data of allottees, amount due on shares
allotted, if any, and balance amount to be unblocked to SCSBs.
T+5
Registrar receives confirmation of demat credit from depositories. Issuer/registrar file confirmation of demat credit, lock-in and
issuance of instructions to unblock ASBA funds, with stock exchange(s).
Issuer make listing application to stock exchange(s) who give listing and trading permission.
Issuer, merchant banker and registrar publish allotment advertisement and stock exchange(s) issue commencement of trading notice.
T+6 Trading commences
Streamlining Initial Public Offer Issue Process – Day wise activity…contd.
15
16
1. Shares delivered to clearing house account through broker before issue opens and /Intimated to Exchange
2. Bids placed and funds blocked
3. File for basis of allotment with SE
4. Allocation instructions
5. Instructions for clearing house and shares tendered for pay in
6. Transfer of shares to pool account of trading members and to investor
7. Pay out of funds and transfer of balance shares if any to promotor/company
Offer For Sale (OFS)
Broker
Investor
Clearing Corporation
Exchange
Merchant Banker/
RTA
Promotor/Company
Trading member Pool a/c
1
4
56
6
7
2
2
2
1
1
36
COAL INDIA LTD
Issue Date January 30, 2015 Total Consideration (Rs. Cr) 22,557.62
Retail Issue Size 126,327,288 Cumulative Quantity (Retail) 55,647,668
Non Retail Issue Size 505,309,152 Cumulative Quantity(Non-Retail) 619,594,231
Issue Size (shares) 631,636,440 Cumulative Quantity 675,241,899
Cases
17
RURAL ELECTRIFICATION CORPORATION LIMITED
Issue Date: April 8, 2015 Total Consideration (Rs. Cr) 1610.09
Retail Issue Size 9,874,590 Cumulative Quantity (Retail) 89,075,112
Non Retail Issue Size 39,498,360 Cumulative Quantity(Non-Retail) 184,107,713
Issue Size (shares) 49,372,950 Cumulative Quantity 273,182,825
For Delisting, Open Offer or Buy Back
Use of Exchange platform as an alternate means for acquisition of shares
Robust secondary market operating process that seamlessly links the investor, broker, exchange platform, the clearing corporation, the clearing banker and the depository
Tax benefit of using an Exchange platform
Robust clearing and settlement mechanisms of secondary market brings efficiency in the system
Acquisition process under the regulatory framework of Exchange bringing trust in the market
Real time disseminate of information brings transparency in the process
Acquisition Window – Salient Features
18
19
1. Shares delivered to pool a/c
2. Shares tendered to Clearing Corporation
3. Bid placed
4. Filed for basis of allotment
5. Allocation instructions
6. Instructions for clearing house
7. Pay in of funds
8. Pay out of shares to acquirer / Pay out of funds to trading member and balance shares if any
9. Funds delivered to shareholders
Acquisition Window
1
2
3
4 5
6
7
8
9
Trading member Pool a/c
Acquirer
Clearing Corporation
Exchange
Merchant Banker/
RTA
Shareholder
8
Initial Public Offer Issue in India - Statistics
Debt-IPOs Equity-IPOs Total IPOs0
40
80
120
160
56
115
171No. of Issues (2013 till November 2015)
Debt-IPOs Equity-IPOs Total IPOs0
25,000
50,000
75,000
100,000
62,353
17,394
78,511
Amount Raised (2013 till November 2015)Am
ount
(Cro
re)
As on January 8, 2016, 119 SME Companies listed on BSE vis-à-vis 10 companies on Other Exchanges.
Amount raised Rs. 918 crore
Out of 119 companies, 12 companies have migrated to the main board of the Exchange
Market capitalization of the companies listed on SME platform Rs. 7,165 Crores
No. of Market Makers – 93
Average investors per issue - 200
SME - Statistics
21
As on November, 149 companies have completed their OFS issues
BSE appointed the Designated Stock Exchange in 126 (~85%) OFS issues.
Over 500 members have participated in OFS via BSE platform.
The process has helped the Government to raise over Rs. 37,520 Crs through divestment of holdings in PSUs.
83 OFS issues have been conducted exclusively only on BSE Platform
Offer For Sale - Statistics
22
BSE NSE0%
25%
50%
75%
100%77%
23%
OFS Bid Share
BSE Desig
nated Exchange
Only BSE
NSE Desig
nated Exchange
Only Nse
0255075
100
43
83
185
No of OFS issues since the beginning
Offer to Buy
Buyback
Bayer Cropscience Ltd.
Book Size (Shares) 12,65,000
Issue Size (Rs.crs) 506
Delisting
ESSAR Oil Ltd.
Book Size (Shares)14,24,89,858
Issue Size (Rs.crs) 2081
Takeover
Tide Water Oil (India) Ltd.
Book Size (Shares) 2,26,512
Issue Size (Rs.crs) 396
23
Statistics
Buyback
Issue Size (Rs.crs)1,256
No. of issues 8
Delisting
Issue Size (Rs.crs) 3,111
No. of issues 4
Takeover
Issue Size (Rs.crs)
558
No. of issues 9
Total
Issue Size (Rs.crs) 4,925
No. of issues 21
24
25