Indian Public Offerings, IPO, Fixed Price Issue, Price Discovery

IPO

What is an IPO?

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 - Initial Public Offering. This paves the way for listing and trading of the issuer's securities in the Stock Exchanges.

What types of instruments' Initial Public offerings are offered generally?

Initial Public offering of the following financial instruments are offered

Equity shares
Non-convertible debenture
Bonds

What is the difference between "Fixed price issue" and "Book Built issue"?

On the basis of Pricing, an issue can be further declassified into Fixed Price issue or Book Built issue. Fixed Price Issue: When the issuer at the outset decides the issue price and mentions it in the Offer Document, it is commonly known as "Fixed price issue". Book built Issue: When the price of an issue is discovered on the basis of demand received from the prospective investors at various price levels, it is called "Book Built issue".

What is a price band?

The price band is a band of price within which investors can bid. The spread between the floor and the cap of the price band shall not be more than 20%. The price band can be revised. If revised, the bidding period shall be extended for a further period of three days, subject to the total bidding period not exceeding thirteen days.

What is a bid lot?

A Bid-lot is the pre-determined number of shares which have to be applied for by an investor. It is different for each issue. There is a minimum lot size which is pre-decided by the company and mentioned in the application form. Eg: Minimum bid lot in IPO of XYZ co. - 10 Bid-lot Multiples of 10 Price Band - 100-120. It means that a retail investor cannot apply for less than 10 shares in that particular issue. The application for more than 10 shares has to be in multiples of 10 like 20, 30, 40, etc

What is price discovery?

Based on demand at various prices the Issuer Company, in consultation with Book Running Lead Managers (BRLMs) decides the final price of the offer. The price thus finalized is called the discovered price.

Who is a Syndicate Member/Broker?

A Syndicate Member/Broker is a member of the Stock Exchange to whom the investor has to submit the IPO Bid/Application form. The Syndicate Member / Broker receives the bid and uploads the same on to the electronic book of the stock exchange. Bids which are not uploaded into the electronic book are not considered for the purpose of allotment. The Syndicate Member/Broker then submits the bid with cheque to the bankers. In case of online application, the Syndicate Member/Broker generates the electronic application form and submits the same to the registrar with proof of having paid the bid amount

What are the different types of investor categories?

Investors are broadly classified under following categories:

Retail individual Investor (RIIs), Non Institutional Investors (NIIs), and Qualified Institutional Buyers (QIBs)
"Retail individual investor" means an investor who applies or bids for securities for a value of not more than Rs. 2, 00,000.

What is the difference between an Initial Public issue (IPO) and a follow-on public offer (FPO)?

IPO - Initial Public Offering comprises of an offer for subscription made by such company whose shares are not listed on any stock exchange for trading, whereas an FPO is offer made by already listed company to issue additional securities. For an already listed company, the investor may decide to buy from the market or subscribe to the offer made by the Company

What is cut-off price?

A retail investor can bid at any price within the price band or can bid at cut-off. "Cut-off price" means the investor is ready to pay whatever price is decided by the company at the end of the book building process. While making the application at Cut off, the investor is required to pay the amount at the highest price band. The excess amount, in case the price discovered is lower, is refunded. Cut-off option can be exercised only by Retail Investors and Employees of the issuing company applying in the Employee Category.

Why is your Demat Account No. (DP-ID & Client-ID) important?

The DP-ID + Client ID, is the definitive identification of the applicant. Demat account fed into electronic bid file, is used to credit shares as well as remit refund. The Registrar is required to process an application based on bid file and in absence of any other possible validation, a wrong but valid demat account can lead to a wrong refund / credit of shares. Thus it is very important that the Demat Account Number is stated correctly in the application form.

Who is a registrar to the Issue?

Registrar to an Issue is a SEBI-registered entity, qualified to act as such, and who electronically processes all the applications and carries out the allotment process, as per the rules/prospectus. The Registrar is responsible for complying with the time deadlines of updating the electronic credit of shares to the successful applicants, dispatching/uploading of refunds and attending to all investor related queries after the issue is completed. Usually, the Registrar continues to work with the company, even after the IPO, as its Registrar and Transfer Agent.

What is “ASBA”?

ASBA means “Application Supported by Blocked Amount”. ASBA is an application containing an authorization to block the application money in the bank account, for subscribing to an issue. If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.

What is the procedure of applying in IPO through ASBA?

Applying through ASBA facility has the following advantages:

The investor continues to earn interest on the application money as the same remains in the bank account.
The investor does not have to bother about refunds, as in ASBA only that much money to the extent required for allotment of securities, is taken from the bank account only when his application is selected for allotment after the basis of allotment is finalized.

Is it NOW mandatory to apply through ASBA only?

It is mandatory for all public issues opening on or after January 01, 2016

Where should I submit my Application Supported by Blocked Amount (ASBA)?

Investor may submit application form to his trading member or to a SCSB List of Self Certified Syndicate Banks (SCSBs) and their designed branches i.e. branches where ASBA application form can be submitted, is available on the websites NSE and on the website of SEBI. The list of SCSB would also be given in the ASBA application form.

Whether my bank account will be blocked or only the amount to the extent of application money is blocked?

No. the entire bank account will not be blocked. Only the amount to the extent of application money authorized in the ASBA will be blocked in the bank account. The balance money, if any, in the account can still be used for other purposes.

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"Prevent Unauthorized Transactions in your demat account - Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from CDSL on the same day issued in the interest of investors. KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account. Disclaimer: Investment in Securities and Commodity Market are subject to market risk. There is no guaranteed return in this market."

"Attention Investors: * Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020. * Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge. * Pay 20% upfront margin of the transaction value to trade in cash market segment. * Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard. * Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month. Issued in the interest of Investors"

Dear Investor,

As you are aware, under the rapidly evolving dynamics of financial markets, it is crucial for investors to remain updated and well-informed about various aspects of investing in securities market. In this connection, please find a link to the BSE Investor Protection Fund website where you will find some useful educative material in the form of text and videos, so as to become an informed investor.

https://www.bseipf.com/investors_education.html

We believe that an educated investor is a protected investor !!!

Abans Securities Private Limited
Stock Broker Name	Registration Number	Registered Address	Contact Number	Email Id
BSE - Capital Market \| Future & Options \| Currency Derivatives \| Commodity Market \| WDM I SLB I Membership No : 3287	SEBI Reg No : INZ000194431	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
NSE - Capital Market \| Future & Options \| Commodity Market \| WDM I SLB I Membership No : 13494	SEBI Reg No : INZ000194431	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
NSE - Currency Derivatives \| Membership No : 13323	SEBI Reg No : INZ000194431	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
MSEI - Currency Derivatives \| Membership No : 62100	SEBI Reg No : INZ000194431	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
CDSL - Depository Participant \| DP ID : 64800	SEBI Reg No : IN-DP-12-2015	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
NSDL -Depository Participant \| DP ID : IN304383	SEBI Reg. No : IN-DP-12-2015	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
MCX - Commodity Market \| Membership No : 56690	SEBI Reg No .INZ000194431	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in

Abans Broking Services Private Limited
Stock Broker Name	Registration Number	Registered Address	Contact Number	Email Id
MCX - Commodity Market \| Membership No. : 40385	SEBI Reg. No. : INZ000032733	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
NCDEX - Commodity Market \| Membership No. : F00681	SEBI Reg. No. : INZ000032733	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
PMS	SEBI Reg. No. : INP000006484	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
AMFI - Mutual Fund Distributor \| ARN160670		36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
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NSE - Currency Derivatives \| Membership No. : 90173	SEBI Reg. No. : INZ000032733	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
BSE - Currency Derivatives \| Membership No. : 4096	SEBI Reg. No. : INZ000032733	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
ICEX - Exchange \| Membership No. : 2076	SEBI Reg. No. : INZ000032733	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in

Abans Commodities (India) Private Limited
Stock Broker Name	Registration Number	Registered Address	Contact Number	Email Id
MCX - Commodity Market \| Membership No. : 28595	SEBI Reg. No. : INZ000059831	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
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Abans Global Broking (IFSC) Private Limited
Stock Broker Name	Registration Number	Registered Address	Contact Number	Email Id
INDIA INX - Currency Derivatives \| Membership No : 5025	SEBI Reg No : INZ000198632	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in
IIBX - Bullion Trading Member \| Membership No : 2006	IFSCA Reg No : IFSCA/Bullion TM -CM /2021-22 /2006	36, 37, 38A, 3rd Floor, 227 Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai - 400 021	+91-022-68170100	compliance@abans.co.in

“Attention Investors!

▪ Beware of fixed/guaranteed/regular returns/ capital protection schemes. Brokers or their authorized persons or any of their associates are not authorized to offer fixed / guaranteed / regular returns / capital protection on your investment or authorized to enter into any loan agreement with you to pay interest on the funds offered by you. Please note that in case of default of a member claim for funds or securities given to the broker under any arrangement/ agreement of indicative return will not be accepted by the relevant Committee of the Exchange as per the approved norms.

▪ Do not keep funds idle with the Stock Broker. Please note that your stock broker has to return the credit balance lying with them, within three working days in case you have not done any transaction within last 30 calendar days. Please note that in case of default of a Member, claim for funds and securities, without any transaction on the exchange will not be accepted by the relevant Committee of the Exchange as per the approved norms.

▪ Check the frequency of accounts settlement opted for. If you have opted for running account, please ensure that your broker settles your account and, in any case, not later than once in 90 days (or 30 days if you have opted for 30 days settlement). In case of declaration of trading member as defaulter, the claims of clients against such defaulter member would be subject to norms for eligibility of claims for compensation from IPF to the clients of the defaulter member. These norms are available on Exchange website at following links:

https://www.nseindia.com/invest/about-defaulter-section

https://www.bseindia.com/static/investors/Claim_against_Defaulter.aspx

https://www.msei.in/Investors//Defaulter_Claims

https://www.mcxindia.com/Investor-Services/defaulters/sop-process-faqs-for-handling-of-claims-of-investors-of-defaulter-member

https://ncdex.com/investor-services/defaulter-member

▪ Stock Brokers are not permitted to accept transfer of securities as margin. Securities offered as margin/ collateral MUST remain in the account of the client and can be pledged to the broker only by way of ‘margin pledge’, created in the Depository system. Clients are not permitted to place any securities with the broker or associate of the broker or authorized person of the broker for any reason. Broker can take securities belonging to clients only for settlement of securities sold by the client.

▪ Always keep your contact details viz. Mobile number/Email ID updated with the stock broker. Email and mobile number is mandatory and you must provide the same to your broker for updation in Exchange records. You must immediately take up the matter with Stock Broker/Exchange if you are not receiving the messages from Exchange/Depositories regularly.

▪ Don't ignore any emails/SMSs received from the Exchange for trades done by you. Verify the same with the Contract notes/Statement of accounts received from your broker and report discrepancy, if any, to your broker in writing immediately and if the Stock Broker does not respond, please take this up with the Exchange/Depositories forthwith.

▪ Check messages sent by Exchanges on a weekly basis regarding funds and securities balances reported by the trading member, compare it with the weekly statement of account sent by broker and immediately raise a concern to the exchange if you notice a discrepancy.

▪ Please do not transfer funds, for the purposes of trading to anyone, including an authorized person or an associate of the broker, other than a SEBI registered Stock broker.

▪ Do not deal with unregistered intermediaries (who are not registered with SEBI/Exchanges).