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Appoint Merchant Company Issue a Draft Prospectus Banker as Book Runner Book Runner appoint Draft Prospectus Filled Price Discovery begin syndicate member and with Concernedthrough Bidding Process register Intermediate authority (SEBI) At close of Bidding, book runner and company decide allocation and allotment.
The Issuer set a Base Price Band (floor price)Within which the investor is allowed to bid for shares
Raises89 crore With Price band between 70 and 75
SupposeCompany XYZ wants to issue 100 shares through book building. They demandis as follows. Subscribed Price (No. of shares) (Rs) 50 100 65 90 80 80 95 70 105 60The issue price will be that level at which all the shares get subscribed. So, theshares are being subscribed to between Rs 60 & Rs 70.
Type Of Book Building100% of the 75% of theNet Offer to Net Offer tothe Public the Public
100% Net Offer TOTAL PUBLIC ISSUE (i.e.net offer to the public)To Public Allocation to retail individual Allocation to Allocation to investors (who participated in non-institutional qualified institutional the bidding process) who investors who buyers applies participated in who participated or bids for securities of or for a the bidding in the bidding value of not more than process. process. Rs.50,000/-. Not less than 25% of Not less than 25% Not less than 50% of the net offer to the of the net offer to the net offer to the public shall be available the public shall be public shall be for allocation available for available for allocation allocation
75% Net OfferTo Public TOTAL PUBLIC ISSUE (i.e.net offer to the public) BOOK FIXED BUILDING PRICE METHOD METHOD
BOOK BUILDING METHOD 75% of the public issue can be offered to institutional investors as well as non institutional investors who had participated in the bidding process Not less than 25% of the netoffer to the public shall be available for allocation to Non-Qualified Institutional Buyers.
FIXED PRICE METHOD 25% of the net offer to the public can be offeredat the price determined through book building, shall be reserved for allocation to retail individual investors who had not participated in the bidding process. Not more than 50% of the net offer to the public shall be available to Qualified Institutional Buyers.
The option of Book Building shall be available to all corporate which areotherwise eligible to make an issue of capital to public.In case of 100% & 75% book building option , the portions shall be separatelyidentified as placement and net offer to public.Securities offered to the public are separately identified as net offer to public.
Underwriting shall be mandatory to the extent of net offer to the public, bythe syndicate member or the book runners.The lead merchant banker shall prepare and file the offer document with theSEBI . The offer document will include total size and price band within whichsecurities are being offered for subscription.The bid will be accepted for a minimum period of 5 days.
Issue of capital shall be Rs.25 crores and above.In case of an under subscription in an issue, the shortfall shall have to be madegood by the Book Runners to the issue.Trading shall commence within 6 days of close of the issue, otherwise interest@15% shall be paid to investor.
LET, T = CLOSE DAY OF THE OFFER T+1 DAYS = PRICE DETERMINATION T+2 DAYS = ALLOCATION LIST IS FINALISEDT+3 DAYS = ALLOCATION LIST ELECTRONICALLY SENT TO THE COMPANY
T+4 DAYS = BANKERS TO CONFIRM CLEARANCE OF FUNDS, STOCK EXCHANGE TO ISSUE TRADING PERMISSION.T+5 DAYS= NSDL/CDL TO CREDIT THE INVESTORS ACCOUNT WITH THE NUMBER OF SHARE ALLOTED.T+6 DAYS =TRADING TO BEGIN AT THE STOCK EXCHANGE`
Investor can not bid below floor price. Book building Process some times leads to underpriced or overprice of securities. Book Building Eliminate unreasonable issue price by Promoters. The Book Runner Lead Manager (i.e. merchant banker) and the syndicate members who are the intermediaries are both eligible to act as underwriters. Book Building help investor to fair play in the market.