IPO
Group 2: Akshay, Gourav, Harsh, Kunika, Sahil, Tushar
Markets
SHARES
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MONEY
Primary Market Secondary Market
What?
Initial Public An IPO is a process by which a private company
issues its first shares of stock for public sale.
Offering Who?
Firms that have attained unicorn status —
surpassed a valuation of $1 billion, usually go
for IPOs, but there are no fixed rules.
Why?
It raises a large amount of money from the
public for a wide range of activities such as
clearing debt, funding corporate expenses,
expansion etc.
How IPO came to be
2021 ZOMATO
2014 ALIBABA GROUP
2010 COAL INDIA
1977 RELIANCE
1783 BANK OF NORTH AMERICA
1602 DUTCH EAST INDIA COMPANY
Eligibility norms required
to invest in an IPO
1 2 3
PAN card issued by A valid Demat In case an investor
the Income Tax account sells the stocks on
department of the listings, he will need
country. a trading account.
How to invest in an IPO?
Opening a Demat- The application Bidding &
cum-trading process Allotment
account The Application Supported Investors are required to bid
The function of a Demat by Blocked Account (ASBA) within the price range and
account is to provide the is an application that according to the lot size
investors with the provision enables the banks to arrest quoted by the company.
to store shares and other funds in the applicant’s bank After the shares have been
financial securities account. allotted, they are credited to
electronically. the investor’s demat
account.
Types of Investors
Qualified Institutional Anchor Investors
Investors
Commercial banks They need to invest a minimum
Public financial institutions of 10 Crores.
Mutual fund houses Up to 50% of the shares which
Foreign Portfolio Investors are meant for QIIs can be sold to
anchor investors as well.
Retail investors High net-worth
individuals (HNIs) /
They are investors whose
Non-institutional
application value is less than ₹2 investors (NII)
lakhs.
The minimum allocation for retail
investors in an IPO is 35% There application value is more
than 2 lakhs.
IPO PROCESS
BREAKING
DOWN
THE IPO
PROCESS
IPO PROCESS
STEP 1
HIRE AN INVESTMENT BANK
STEP 5
APPLICATION PROCESS
STEP 2
DUE DILLIGENCE & FILLINGS
STEP 6
SHARE ALLOTMENT
STEP 3
PRICING
STEP 7
LISTING ON STOCK EXCHANGE
STEP 4
DISTRIBUTION
STEP 1
HIRING AN
INVESTMENT BANK
Reputation & Track Record
Quality of Research
Distribution Expertise
Prior Relationship
STEP 2
Due
Dilligence &
Filings
Paperwork
Underwriting
Red Herring Prospectus
Compliance & Filings
STEP 3
Pricing
Valuation of a company & Issue
Size
Valuation at Rs. 10,000 Cr
Issue Size of Rs. 2,000 Cr
Issue Price & No. of shares to be
issued
Issue Price at Rs. 200 per share
Therefore, 10 Cr shares issued
Lot Size & Minimum Investment
Lot Size of 50 shares
Min Investment of Rs. 10,000
STEP 3
Fixed Price Rs. 200
Issue
Book Building Price Band
(Rs. 180 - Rs. 200)
Issue
Floor Price
20%
Cap Price
STEP 4
Distribution
Qualified Institutional Non-Institutional Retail
Buyers (QIBs) Investors Investors
STEP 5
Application
Process
Investors apply to subscribe to an IPO
Over Subscribed
demand for shares is greater than the number
of shares offered
Under Subscribed
demand for an IPO or is less than the number
of shares issued
Fully Subscribed
all the shares have been purchased or
guaranteed by investors
STEP 6
Share
Allotment
Quota reserved for each investor category
STEP 6
Issue Size: Rs. 2,000 Crores
Fixed Price No. of shares to be issued: 10 Cr Shares
Issue Price: Rs. 200/share
Issue Lot Size: 50 shares
Minimum Investment: Rs. 10,000
Retail Investor NII, HNI QIB
60%
40%
STEP 6
Issue Size: Rs. 2,000- Rs. 2200 Crores
Book Building No. of shares to be issued: 10 Cr Shares
Floor Price: Rs. 200/share
Issue Cap Price: Rs. 220/share
Lot Size: 50 shares
Minimum Investment: Rs. 10,000 - 11,000
Retail Investor NII, HNI QIB
Min 35% Min 15% Max 50%
Share Allotment
Over-Subscribed Multiple Times 90% - 100%
Retail- 1 lot to investors selected by computerized lucky draw
NII & QIB- Proportionate allotment Full Allotment to all Investors
Slightly Over-Subscribed <90%
Retail- 1 lot to every investor
Balance Shares- Proportionate Allotment No Allotment
STEP 7
Listing on
Stock Exchange
Bidding/Offer open for 3-5 days
Listing in 3 days from closing date
Conditions for
INVESTMENT
NII
RII QIB ANCHOR
HNI
- Bid Amount < 2Lakhs - Bid Amount > 2Lakhs - Bid Amount > 2Lakhs - QIB with a offer more
- Allowed to bid at - NOT allowed to bid - NOT allowed to bid than 10 crores
cutoff price at the cutoff price at the cutoff price -Up to 60% of the QIB
- Can revise bids - Cannot revise the - Cannot revise the category can be
before closing date bid bid allocated to ANCHORS
-Not eligible for cutoff
price
STEP 3
Minimum 90%
Subscription
Minimum Rs 10000-15000
Application
ZOMATO
A CASE STUDY
01 02
Background How it earns profit ?
Deepinder Goyal and Pankaj It has multiple revenue streams.
Chaddah founded this well- Zomato charges restaurants a
known Gurgaon-based startup 12 commission based on the
years ago. number of orders they receive.
Zomato was advised by
KOTAK MAHINDRA MORGAN STANLEY CREDIT SUISSE
CAPITAL
BANK OF AMERICA CITI BANK
Pricing
The total size of the IPO — Face value - Rs 9,000
Rs 9,375 crore. crore.
Secondary issue - Rs 375 Price range for the
crore according to early offer is Rs 72-76 per
investor Info Edge equity share.
Application Process
IPO
Share Allotment
Investors who have applied for the Zomato IPO can check the status of share
allocation through official portal of the BSE ..
How to check Zomato IPO share allotment status?
[Link] the official website of BSE India
[Link] on 'Status of issue application on the homepage of the website
[Link] Equity in Issue Type
4. Select Zomato in Issue Name
Enter your application number and PAN
After entering all the fields, click on search button to the status of the IPO
Pros Cons
´Company get financial benefits Smaller businesses may find it
in the form of Raising capita. difficult to afford the time and
money for an IPO.
Increase public awareness of the Taking a company public also
company because IPOs often makes much of that company’s
generates Publicity. information and data public.
Myths regarding
IPO
If the public is excited about the IPO,I
should invest.
IPO investment will yield higer reward
then waiting to invest.
If a company is going public, it must
be financially stable
Only individual investors are awarded
IPO shares
Key Takeaways
Thank You