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Types of Issue in Primary Market

This document discusses types of issues in the primary market. It begins by defining the primary market as the market that deals with new security issuances by companies, governments, and public institutions. It then describes several methods for primary market issues: public issues like IPOs and FPOs, rights issues, bond issues, and private placements like preferential allotments and QIP placements. Specifically, it provides details on what distinguishes IPOs from FPOs and different types of public issues like fresh issues and offers for sale. It also briefly outlines what characterizes rights issues, bonus issues, and the two main types of private placements.

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Ankit Patidar
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376 views16 pages

Types of Issue in Primary Market

This document discusses types of issues in the primary market. It begins by defining the primary market as the market that deals with new security issuances by companies, governments, and public institutions. It then describes several methods for primary market issues: public issues like IPOs and FPOs, rights issues, bond issues, and private placements like preferential allotments and QIP placements. Specifically, it provides details on what distinguishes IPOs from FPOs and different types of public issues like fresh issues and offers for sale. It also briefly outlines what characterizes rights issues, bonus issues, and the two main types of private placements.

Uploaded by

Ankit Patidar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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PRESTIGE INSTITUTE OF MANAGEMENT

AND RESEARCH, INDORE (M.P)

2021-2023
PROGRAM :- MBA FA ‘B’
SUBJECT :- Financial Market
TOPIC :-TYPES OF ISSUES

SUBMITTED BY :-
AYUSHI VERMA
SUBMITTED TO:-
MAHAK BHAVSAR
DR. PRATIMA JAIN
JAYESH PALIWAL
MA’AM
ANKIT PATIDAR
PRIMARY MARKET
The PRIMARY MARKET is the part of the capital market
that deals with issuing of new securities. Companies,
governments, or public sector institutions can obtain
funds through the sale of a new stock or bond through
primary market. This is typically done through an
investment bank or finance syndicate of securities
dealers.
KEY POINTS OF PRIMARY MARKET :-

 New stock and bonds are sold to the public for the first
time.
 Investor are able to purchase securities directly from
the issuers.
 Success of the Capital market depends on Primary
market.
 Business enter the Primary market to raise money from
the public.
 Accelerates the process of capital formation in the
country’s economy.
PRIMARY MARKET
Methods to issue in PRIMARY MARKET :-
 PUBLIC ISSUE
 INITIAL PUBLIC OFFER
 FURTHER PUBLIC OFFER
 PRIVATE PLACEMENT
 PREFERENTIAL ALLOTMENT
 QUALIFIED INSTITUTIONAL PLACEMENT
 RIGHT ISSUE
 BOND ISSUE
PUBLIC ISSUES
• The process of offering securities to investors by the
company to raise funds.
• Basically when equity shares , bonds etc. are made
available to buy in open market.
• The main purpose of the Public issue is to raise
money through public and get its share listed at any
of the registered stock exchanges in India.
TYPES OF PUBLIC ISSUES

INITIAL PUBLIC OFFERING

• Offering shares of a private corporation to the public in a new stock issuance.


• Provide companies with an opportunity to obtain capital by offering shares through primary market.
• Companies must meet requirements by exchanges and the Securities Exchange commission (SEC) to
hold an IPO.
• Companies hire investment banks to market , gauge demand , set the IPO price date , and more.
FURTHER PUBLIC OFFERING

• A follow-on public offering (FPO) is the issuance of


shares to investors by a company listed on a
stock exchange.
• A follow-on offering is an issuance of additional
shares made by a company after an initial public
offering (IPO).
• Companies usually announce FPOs to raise equity
or reduce debt.
TYPES OF IPOs AND FPOs ARE

FRESH ISSUE

• FRESH ISSUE refers to the issuance of new equity shares in the company and selling
those newly issued shares to the investors.
• The money raised by the fresh issue of shares and its subsequent sale of an IPO is
received by the company and utilized as per the objects of the issue which is
mentioned during its IPO.
OFFER FOR SALE

• A simple method of share sale through the exchange platform for listed companies.
• Only promoters or shareholders (holding more than 10% of the capital) can come up
with such an issue.
• Minimum of 25% of shares offered, are reserved for mutual funds (MFs) and
issuance company.
• Minimum of 10% of the offer size is reserved for retail investors.
RIGHT ISSUE

• An invitation to exiting shareholders to purchase


additional new shares in the company.
• Shareholder are not obligated to exercise this right.
• Cash-strapped companies can turn to Right issue to
raise money when they really need it.
BONUS ISSUE
• BONUS ISSUE is an offer of free additional shares to
existing shareholders.
• A company may decide to distribute further shares as
an alternative to increasing the dividend payout.
• Bonus shares are issued according to each
shareholder’s stake in the company.
PRIVATE PLACEMENT

• A company makes the offer of sale to individual and


institution privately without the issue of a prospectus.
• Private placements are relatively unregulated
compared to sales of securities on the open market.
• Private sales are now common for startups as they
allow the company to obtain the money they need to
grow while delaying or foregoing an IPO.
TYPES OF PRIVATE PLACEMENT

PREFERENTIAL allotment

• An issue of shares or convertible securities by listed or unlisted companies to


a select group of investors.
• A person holding preferential shares has rights to be paid from company
assets.
QUALIFIED INSTITUTIONAL
placement

• A way to issue shares to the public without going


through standard regulatory compliance.
• Qualified institutional buyers are the only entities
allowed to purchase QIPs.
• QIBs were created to avoid dependency on foreign
resources for raising capital.
THANK YOU
FOR YOUR ATTENTION

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