...offering has been approved by the Securities and Exchange Commission. The system of following a book building method for offering new issues through primary markets has become more popular over the conventional method of pre-determining the issue price by merchant bankers and companies, as the same enables more flexibility and transparency in the system of determining the issue price for a primary issue floated in the markets, by giving the potential investors a larger window to participate in helping the company/ merchant banker arrive at the final issue price, according to the demand and supply for instrument, at different price points. The relatively mature capital markets across the globe have established this as a simple and more acceptable and popular method for floating of new issues, rather than arbitrarily determine the issue price at a price point, in advance to the IPO, by way of expected demand for the issue, and the premium it may be able to command. However, in some of the emerging markets where capital markets have not yet become mature enough, book building method for IPO’s is still at a nascent stage. Book building method is a relatively new phenomenon of modern pricing mechanism for IPOs, which encourages companies to enlist with stock exchanges as it ensures fair pricing of initial public offerings (IPO). While in some of the developed...
Words: 483 - Pages: 2
...IPO Process in Bangladesh Submitted to: Md. Lutfur Rahman Assistant Professor, Department of Business Administration, East West University, Dhaka. Submitted by: Name | ID | Arafat Rauf | 2009-2-10-345 | FIN 335 Section: 3 Fall: 2011 Date of Submission: 15th December 2011 Executive Summary | This term paper gives us a practical experience while passing through the theoretical understanding. The report is the result of our understanding about what are IPO and IPO listing procedure in Bangladesh. In the introduction, we have briefly discussed about IPO. What it is. In the next we have also explained the methodology regarding this report. Secondary data and information have been used in preparing this report. Then comes the Analysis part, where we have explained the listing procedure. We have divide listing procedure in two Parts according to their behavior, one is work before Consent and another in work after consent. In the whole listing procedure, the works are separable like work before IPO consent and work after IPO consent. Like all study, this report has also certain limitations which were in some cases unavoidable. In the end we have concluded with a short discussion of overall analysis. Table of Content Content | Page Number | Introduction | 4 | Methodology of the Study | 4 | Analysis | 5 | Conclusion | 9 | Bibliography | 10 | Introduction | Initial public offering (IPO), also referred to simply as a "public offering"...
Words: 2250 - Pages: 9
...Stock market crash in Bangladesh in 2010-2011: * Introduction Stock market is one of the most important financial institutions of any economy as well as Bangladesh. It opens door for companies to raise huge amount of capital from a lot of individual investors inside & outside of a country. Investors participate voluntary to buy ownership of a company in the public market. It is said that stock market is an intermediary institution to adjust a gap between surplus units and deficit units of an economy. In these days for millions of middle class educated people in Bangladesh investing in stocks is more popular than investing in any other investment sectors. For an investor, stocks are more liquid than any other investment sources as it gives ability to sell and buy ownership anytime without any hassle. Since 2007 share prices of Bangladesh stock market have been increasing steadily over the past four years and it outperformed almost all the world´s markets (Amadeo, 2012). The financial year 2008-09 is known for the global financial and economic crisis. Many developed and developing countries fall into recession. However, it could not affect Bangladesh economy greatly. So, the stock market of the country did not see any significant changes or fall. As CPD (2011) reported, financial year 2008-09 was a volatile year but during this year Bangladesh economy benefited from low prices of import-able and was able to avoid negative pressure on its export of goods and services...
Words: 2956 - Pages: 12
...RUNNING HEAD: IPO Paper IPO Paper - Chipotle Mexican Grill Advanced Managerial Finance– FI_516 – Fall_B Keller Graduate School of Management of DeVry University February 6, 2012 IPO Paper – Chipotle Mexican Grill Chipotle Mexican Grill, Inc. (Chipotle) is a chain of restaurants in the United States, Canada, and today around the world specializing in burritos and tacos, founded by Steve Ells in 1993 and based in Denver, Colorado. The name derives from "chipotle", the Mexican Spanish name for a smoked, dried jalapeño chili pepper. The restaurant is known for its large burritos, assembly line production and use of natural ingredients. The company has released a mission statement called “Food with Integrity”, which highlights its efforts in using organic ingredients, and serves more naturally raised meat than any other restaurant. Chipotle is one of the first chains of fast casual dining establishments. From 1998 to 2006, McDonald's Corporation owned a majority interest in Chipotle, from which it fully divested in 2006. The company currently has more than 1100 locations, with restaurants in 41 states, Washington, D.C., Toronto, Ontario, and London, England. Its net income in 2010 was $178 million, and it has a staff of over 26,500 employees. Overall revenue for Chipotle in 2004 was $470.7 million, a 130% increase from 2002 and a 49% increase from 2003, this was driven by new store openings and increased average sales. Average store sales grew from $1,056,000 for...
Words: 1166 - Pages: 5
...laws governing primary markets, please refer to the Acts/Regulations/Guidelines appearing in the Legal Framework Section . FAQs are presented under following 12 broad headings. 1. Different kinds of issues 2. Types of offer documents 3. Issue requirements 4. Pricing of the issue 5. Understanding book building 6. Investment in Public/Rights issues 7. Categories of Investors 8. Intermediaries involved in the issue process 9. Guide to understand an offer document 10. SEBI’s role in an issue 11. New terms 12. Additional information 1 2 “Unlisted Company” means a company which is not a listed company. “Listed Company” means a company which has any of its securities offered through an offer document listed on a recognized stock exchange and also includes Public sector Undertakings whose securities are listed on a recognized stock exchange. 1 1. Different kinds of issues What are the different kinds of issues which can be made by an Indian company in India? Primarily, issues made by an Indian company can be classified as Public, Rights, Bonus and Private Placement. While right issues by a listed company and public issues involve a detailed procedure, bonus issues and private placements are relatively simpler. The classification of issues is as illustrated below: (a) Public issue (i) (ii) Initial Public offer (IPO) Further public offer (FPO) ...
Words: 7451 - Pages: 30
...PUBLIC ISSUE IPO Initial Public Offer• When an unlisted company makes either a fresh issue of securities or offers its existing securities for sale or both for the first time to the public, it is called an IPO. This paves way for listing and trading of the issuer‟s securities in the Stock Exchanges. Eligibility for IPO • a) Net tangible assets of at least Rs. 3 crore in each of the preceding three full years • b) Distributable profits for at least three out of the immediately preceding five years • c) Net worth of at least Rs. 1 crore in each of the preceding three full years • d) The issue size should not exceed 5 times the pre-issue net worth • e) If there has been a change in the company‟s name, at least 50% of the revenue for preceding one year should be from the new activity denoted by the new name • Alternative routes Recognizing that many good companies, for one reason or the other, may not be able to comply with all the eligibility norms, two other alternative routes are available to such companies: • Alternative I: • Issue shall be through book building route, with at least 50% to be mandatory allotted to the Qualified Institutional Buyers (QIBs). (b) The minimum post-issue face value capital shall be Rs. 10 crore or there shall be a compulsory market-making for at least 2 years OR • Alternative II: • A) The “project” is appraised and participated to the extent of 15% by FIs/Scheduled Commercial Banks of which...
Words: 1777 - Pages: 8
...variety of produce. In addition, Kudler offers gourmet cheeses from 21 countries and fresh baked goods. According to its corporate site, Kudler currently operates three stores in southern California. The company can deliver quality merchandise because they “shop the world" and “go to extensive lengths to assure that Kudler Fine Foods is the purveyor of choice for customers aspiring to purchase the finest epicurean delights” (University of Phoenix, 2013, para 3). The following analysis shall discuss several options available to Kudler Fine Foods when considering expansion from its current status as a privately held company. The options considered are to formulate an initial public offering, engage in the acquisition of a similar business, or merge with another company. Team B will compare and contrast the strengths, weaknesses, opportunities, and threats associated with each option. Globalization and exchange rates are a primary factor in expansion, and the team shall discuss the effects of globalization, factors associated with exchange rate risks and how best to mitigate such risk. In addition, the team shall formulate a recommendation of the best option for Kudler. Going Public through an IPO An initial public offering (IPO) is the first sale of stock by a company. To generate the capital needed to expand, small companies that want to further the growth of their company often use an IPO. Kudler going public means that the company has to convert into a corporation because...
Words: 1750 - Pages: 7
...Organization Strategy Paper The competitive nature of businesses is a direct reflection of a strong management team. In order for a company to remain competitive the management team must remain innovative, knowledgeable of the market, and open to new ideas. Expanding operations may be one way that the management team decides to stay ahead of the competition. Expansion may not only create growth, but it may create value, wealth, and fresh ideas for the future. This project is designed to analyze a possible operation expansion for Riordan Manufacturing, an industry leader in the field of plastic injection molding (Riordan Manufacturing, 2006). The researchers of this project will analyze three possible expansion approaches including an initial public offering (IPO), a merger, and an acquisition. It will then be determined which approach would lead the Riordan Manufacturing team ahead of the competition and ultimate greater success for the company. Strengths of Each Approach Riordan Manufacturing has three options to expand its operations, go public through an IPO, acquire another company in the same industry, or merge with another organization. The benefits or strengths of doing each of these are addressed below. If the choice is to go public through an IPO then the benefits to Riordan, according to Inc. (n.d.) are: • “A publicly traded company may tap a broader universe of investors as well as a larger pool of investment capital. • A publicly traded company may receive...
Words: 2211 - Pages: 9
...Team B Tyler Foley Kyla Canada Lauren Sparks Melissa Felder FIN/370 November 2, 2015 Week 5 Christine Helbling Role of Investment Banker and Role of Underwriter When companies are trying to sell securities, they have the option to sell directly to you or to sell the securities through programs, however majority of the sales are executed through investment bankers. An investment banker is serves as a middleman to channel the money from investors to firms and governments that need the funds. Investment bankers, when being the middleman, they are able to help bring together individuals with funds to invest and firms that need financing. They are able to save the company in question time and money by identifying risks associated with a project before the company moves forward. They have a finger on the pulse of the current investing climate, so the businesses turn to them for advice on how best to plan their development. They assist with pricing financial instruments so as to maximize revenue and with navigating regulatory requirements. A few examples would include investment bankers that work for are JP Morgan (JPM) and Bank of America Merrill Lynch (BAC). The role of an underwriter is that they work closely with the issuing body to determine the offering price of the securities, buys them form the issuer, and sells them to investors via the underwriter’s distribution network. Underwriters generally receive underwriting fees from their issuing clients, but...
Words: 1445 - Pages: 6
...selling his fresh juice. Everyone loved the product and they went on to open the Allserve General Store on Nantucket's Straight Wharf. They named the fruit juice "Nantucket Nectars". Tom and Tom invested both of their life savings, which was about $17,000 to contract a bottler and finance inventory in the first two years. The next two years saw them operating in an undercapitalized state on a small bank loan so in order to raise funds to improve distribution and increase inventory, they sold 50% of the company to Mike Egan. Nantucket Nectars achieved its first year of profitability in fiscal year 1995. As Nantucket Nectars continued to grow, they were eventually approached by several companies that were interested them. Tom and Tom had to decide if they should: 1) Undergo an IPO 2) Remain independent 3) Sell the company In order to provide a recommendation for Tom and Tom I will first need to conduct a SWOT analysis to assess the company’s strength, weakness, opportunities, and potential threats. Then I will weigh the pros and cons of the three options listed above. SWOT Analysis Strength Nantucket Nectars' numerous strengths have led to their success. They produce all natural products that have a great taste, have a very strong management team as well as a strong branding, guerilla marketing skills, possess the ability to exploit small, rapidly changing market opportunities, last good access to single-serve distribution in the New Age beverage market, and is the...
Words: 1342 - Pages: 6
...Working report on “IPO consent and listing procedure in Bangladesh”, Capital Market, Finance Division, Grameenphone, Ltd. Prepared by: Md. Asad-uz-zaman Id# 0410094 An Internship Report Presented in Partial Fulfilment of the Requirements for the Degree Bachelor of Business Administration (BBA) Independent University, Bangladesh April 30, 2009 1 A WORKING REPORT ON THE CAPITAL MARKET, FINANCE DIVISION OF GRAMEENPHONE 2 Working report on “IPO consent and listing procedure in Bangladesh”, Capital Market, Finance Division, Grameenphone, Ltd. Prepared by: Md. Asad-uz-zaman Id# 0410094 Approved By: Rushdi Md Rezaur Razzaque Lecturer School of Business Independent University, Bangladesh 3 Letter of Transmittal Date: April 30, 2009 Rushdi Md Rezaur Razzaque Lecturer School of Business Independent University, Bangladesh Dear Sir, I have prepared my internship working report on “IPO consent and listing procedure in Bangladesh”, based on working experience of Capital Market division, Finance Department, Grameenphone Ltd, which I am submitting along with this letter. It was an energizing experience throughout the semester and preparing this report further enhanced my insight about how corporate level activities are being done and experience the real life situations which I have learnt throughout my internship (BBA-499A) in Grameenphone Ltd. This report will also reflect my working experience as an intern in Finance Division. As you will note...
Words: 9098 - Pages: 37
...part of the company to China in 2000. It has been a while since the company has made any moves, and they have decided to expand the company once again. Riordan can expand the business in one of three ways: an IPO, acquire another organization, or merge with another organization. Strengths of Expansion Options Riordan must decide how to continue building their company. The first choice is an Initial Public Offering (IPO). This is “… basically the first time a company decides to sell stock to the public” (Marquit, 2012, Para. 2). This is a good idea because it allows the company to gain funds without the commitment of paying interest on a loan. The second option Riordan has is to acquire another. Because of its successful experience with acquisitions in the past, Riordan knows how to proceed. Purchasing another company Riordan can expand the product base while absorbing the competition. The final option is to merge with another company. This choice allows Riordan the ability to manufacture new products without full accountability for the financial aspect. If the products do poorly, Riordan will not have full financial responsibility. Weaknesses of Expansion Options Each of the three options has positive and negative aspects. If Riordan Manufacturing chooses the IPO route, there are added requirements the company faces. It must abide by the rules and...
Words: 1244 - Pages: 5
...this assignment is to solve and study IPO in detail and provide the necessary solutions to it. Internet has been also used with referencing to seek out the solutions. Table of Contents Content | Page no: | Question A | 4 | Question B | 5 | Question C | 10 | Question D | 12 | References | | Question A: The IPO process is characterized by information asymmetries. Explain how these asymmetries may be reduced through the book-building process. IPO (initial public offering):- The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.IPO process, are asymmetrically informed as managers and internal subjects posses private information about the firm's future prospects which may be not completely known to external investors. The process by which an underwriter attempts to determine at what price to offer an IPO based on demand from institutional investors. A company issuing an IPO through book building method follows the following steps: * A leading merchant banker is nominated by the IPO issuing company for book building, known as Book-Runner. * The concerned company then announces the total number of IPO shares that it is willing to issue along...
Words: 4277 - Pages: 18
...productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Blackwell Publishing and American Finance Association are collaborating with JSTOR to digitize, preserve and extend access to The Journal of Finance. http://www.jstor.org THE JOURNAL OF FINANCE * VOL LIII, NO. 1 * FEBRUARY 1998 Why Do Companies Go Public? An Empirical Analysis MARCO PAGANO, FABIO PANETTA, and LUIGI ZINGALES* ABSTRACT Using a large database of private firms in Italy, we analyze the determinants of initial public offerings (IPOs) by comparingthe ex ante and ex post characteristics of IPOs with those of private firms. The likelihood of an IPO is increasing in the company's size and the industry's market-to-bookratio. Companies appear to go public not to finance future investments and growth, but to rebalance their accounts after high investment and growth. IPOs are also followed by lower cost of credit and increased turnover in control. TO THE DECISION GO PUBLICis one of the most important and least studied questions in corporate finance. Most corporate finance textbooks limit themselves to...
Words: 19654 - Pages: 79
...an executive resolution, and was subsequently upgraded as a fully autonomous body (a statutory Board) in the year 1992 with the passing of the Securities and Exchange Board of India Act (SEBI Act) on 30th January 1992. In place of Government Control, a statutory and autonomous regulatory board with defined responsibilities, to cover both development & regulation of the market, and independent powers have been set up. Paradoxically this is a positive outcome of the Securities Scam of 1990-91. The basic objectives of the Board were identified as: * to protect the interests of investors in securities; * to promote the development of Securities Market; * to regulate the securities market and * for matters connected therewith or incidental thereto. Since its inception SEBI has been working targetting the securities and is attending to the fulfillment of its objectives with commendable zeal and dexterity. The improvements in the securities markets like capitalization requirements, margining, establishment of clearing corporations etc. reduced the risk of credit and also reduced the market. SEBI has introduced the comprehensive regulatory measures, prescribed registration norms, the eligibility criteria, the code of obligations and the code of conduct for different intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio managers, credit rating agencies, underwriters and others. It has framed bye-laws, risk identification...
Words: 2239 - Pages: 9
