BOOK BUILDING METHOD ???

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Querist : Anonymous

Querist : Anonymous (Querist)

05 December 2010 Hello experts

pls tell in book building method what is required to be ascetained the exact issue price or the premium to be charged on shares ??

whether this exact issue price or the premium is the one and the same thing in this method ???

FPO meaning confusion ??? just look at definition

A follow on public offering (FPO) is when an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, through an offer document.

i want to know in FPO the already listed company is making a public issue for the first time or it is second or futher public issue as def says follow on public offer ???

CA Punit

CA Punit (Expert)
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06 December 2010 Book building process is to arrive at a
weighted average price of the issue (premium incl.)

IPO = Initial Public Offer
when issued for the first time

FPO = Further Public Offer
made after IPO

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Ankur Garg

Ankur Garg (Expert)
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06 December 2010 Hi,

No need to confuse at all.

Further Public offering (FPO) is nothing but a situation when an already listed company makes another issue of securities to the public through an offer document.

An IPO is IPO...but whenever a listed co. go for further public issue, the defined route is FPO.

Regards

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Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2010 Thanks punit sir and Ankur sir for the explanation...

can u further tell me about the conceptual def of green shoe option in 3 -4 lines....

Ankur Garg

Ankur Garg (Expert)
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06 December 2010 Green shoe option normally given by the company to deal with higher demand of shares.

If greenshoe option is there then company can issue excess shares then originally offered through offer doc keeping in view the excess demand.

A provision contained in an underwriting agreement that gives the underwriter the right to sell investors more shares than originally planned by the issuer. This would normally be done if the demand for a security issue proves higher than expected. Legally referred to as an over-allotment option.

A greenshoe option can provide additional price stability to a security issue because the underwriter has the ability to increase supply and smooth out price fluctuations if demand surges.

Greenshoe options typically allow underwriters to sell up to 15% more shares than the original number set by the issuer, if demand conditions warrant such action. However, some issuers prefer not to include greenshoe options in their underwriting agreements under certain circumstances, such as if the issuer wants to fund a specific project with a fixed amount of cost and does not want more capital than it originally sought.

The term is derived from the fact that the Green Shoe Company was the first to issue this type of option.

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Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2010 Thanks very much Ankur sir for ur prompt reply....

Ankur Garg

Ankur Garg (Expert)
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06 December 2010 You are always welcome...Keep sharing your doubts !!!

Regards

Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2010 Hii Ankur sir pls tell that in an issue made through book building method , the allocation in net offer to the public category as follows means what ???

situation 1 : ( 75 % - 25 % criteria )

situation 2 : ( 90 % - 10 % criteria )

doubt no. 2

and one more thing about IPO and FPO... is IPO is done only by a unlisted company through public issue or in case of listed co. the further offer to be called FPO means that co has already made an IPO through public offer ??? i got it right or wrong ???

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Ankur Garg

Ankur Garg (Expert)
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06 December 2010 You are right about dount 2

Well am not sure about doubt no. 1 as this work a normally done by SEBI approved lead managers cum book runners...which is something really high class work...

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Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2010 ok thanks sir......

but what abt this high class matter... shall i leave this one ????

it is given like this in D.G sir notes

for 75 % - 25 % situation

the allocation in NOTP category shall be made as follows

a) not less than 35 % of NOTP to retail individual investors

b) not less than 15 % to Non- ins investors

c) not more than 50 % to QIB's , 5% of which shall be allocated to mutual funds..