For a company to establish itself or run, it requires funds. Even established companies require money in order to continue with their ongoing process.
IPO/FPO are a convenient way to raise funds for a business without having to return the borrowed money. Instead, they provide ownership to the investor in form of shares or stocks. It’s a good way of building attraction and making sure that the issue gets sold like candy.
FPOs, if they require additional fund but do not have the means to take a loan from the bank, if a company has already gone for IPO then they go for FPO.
Why IPOs- Top 7 Reasons:
- Funding Capital Requirements for Organic Growth
- Expansions & Diversification into New Projects Funding Global Requirements or Joint Venture
- Funding Infrastructure Requirements
- Marketing Initiatives and building Distribution Channels
- Financing Working Capital
- Repaying debts to strengthen the Balance Sheet Meeting Issue Expenses For Non-funding Needs Retention and incentive for Employees through stock options
- Provide liquidity to the shareholders
Why MUDS ?
MUDS offer exhaustive pre & post due-diligence review on IPO/FPO, including guiding through formalities and procedures connected to the issuance, right from Pre-IPO to Listing and complying all the regulations connected thereof. Issuance of a confirmation of compliance of conditions and stipulations as prescribed by SEBI is a must.
These are all the pre-screening activities MUDS help its clients with.
Additionally, MUDS help in being a nodal authority while dealing with the SEBI. Being a facilitator, MUDS undertake following activities during floating of a public issue:
- Undertake fresh issue of IPO of an unlisted company
- Listing – filing of listing documents with SEBI and Stock exchanges
- SEBI clearance and ROC guidelines
- ROC filing of final prospectus
- Being a facilitator between the company and the investment banking firm, assisting during underwriting service
- Providing the services of book runner and lead underwriters
- Help them in IPO grading for assessment of IPO in relation to other listed IPOs
- Helping investor decide whether to go for fixed price issue or a book built issue method of pricing based on investors demand.
- Taking prior approval of the registrar on the right issue
- Handling all the fast track issues, Book Building-issues and Fixed Price Issues
- Obtaining NOC for 1% of issue amount
- Finalizing basis of allotment
- Finalization and filing of offer document
- Listing and Trading Approval Stage
- Listing of unlisted company pursuant to amalgamation or demerger
- Name change
- Buyback of Equity Shares
- Listing on BSE SME platform
Further MUDS will help make the company follow all the acts and furnish disclosures necessary while listing. Including like
- Preparation of Letter of Application to be submitted to the stock exchange where the company wishes to be listed. Timely payment of annual listing fees, submission of results in form of P&L, balance sheet, shareholding pattern, corporate governance report etc.
- Procuring Permission to use the name of BSE/NSE in an Issuer Company’s Prospectus
- Completing trade permission formalities at all stock exchange and deposit of 1% issue amount.
Contact details of professionals at MUDS
- Contact No: +91 7011198909
- Email: [email protected]
For listing a company on BSE/BSESME through public offering of IPO/FPO, minimum listing requirements are as follows:-
For large-cap companies (BSE/NSE):
- The minimum post-issue paid-up capital of the company shall be Rs. 10 crores for IPOs Rs.3 crore for FPOs
- The minimum issue size shall be Rs. 10 crore
- The minimum market capitalization of the Company shall be Rs. 25 crore (market capitalization to be calculated by multiplying the post-issue number of equity shares with the issue price)
For small & medium enterprises (BSE SME Platform)
- The minimum post-issue paid-up capital of the company shall be at least Rs. 3 crore and at most Rs. 25 Crores
- Minimum application and Trading Lot size – Rs.1,00,000/- or in multiples thereof
- Underwriting – 100% (Merchant Bankers to underwrite 15% in own account)
- Min No. of members for Issue – 50
- Net worth (excluding revaluation reserves) of at least Rs.3 crores as per the latest audited financial results.
- Track record of distributable profits in terms of sec. 123 of Companies Act, 2013 for at least two years out of immediately preceding three financial years and each financial year has to be a period of at least 12 months or the net worth shall be at least Rs.5 crores.
Still not clear? Don’t hesitate to write to MUDS at [email protected] or call MUDS at +91 7011198909 for Free Consultation!
Procedure for floating an IPO
Floating an IPO is when a company is all set to issue stocks or shares to the public for the first time. The floating of shares can be done thru a fixed price method or book building method or a combination of both.
Involves an Issuer Company & IPO Process Initialization
- To appoint lead manager as book runner who is the main underwriter
- Appoint registrar of the issue
- Appoint syndicate members or the appointed intermediate underwrites
Lead manager’s pre-issue role part – 1
- Prepare draft offer prospectus document for IPO
- File draft offer prospectus with SEBI
Review of draft prospectus by SEBI
- Revert it back to Lead Manager in case of any clarification
- If SEBI approve the draft offer prospectus, the draft offer prospectus becomes an Offer Prospectus
Lead manager’s pre-issue role part – 2
- Submit this Offer Prospectus to Stock Exchanges, registrar of the issue and get it approved
- Decide the issue date & issue price band
- Modify Offer Prospectus that will now have a date and price band on it. This document is now called The Red Herring Prospectus.
- The Red Herring Prospectus along with the IPO Application Forms are then printed and posted to the syndicate members and through which they are distributed to the investors.
Investor bidding for the public issue
- Investors fill the application forms, place orders with the syndicate members
- Syndicate members update the BSE/NSE with the bidding information
- They also send all the physically filled forms and cheques to the registrar
- Investor can revise the bidding by filling a form and syndicate member keeps updating the latest data
Public Issue Closes for biddings
Based on the bids received, lead managers evaluate the final issue price and update the ‘Red Herring Prospectus’ with the final issue the final price and send it to SEBI and Stock Exchanges.
Registrar – Processing IPO Applications
- Registrar receives all application forms & cheques
- Send the cheques for clearance and weed out all the bogus applications
- Prepare ‘Basis of Allotment’.
- Transfer shares in the Demat account of investors.
- Refund the remaining money through ECS or Cheques
Lead manager – Stock Listing
Once all allocated shares are transferred in investors DP accounts, the Lead Manager with the help of Stock Exchange decides Issue Listing Date
Finally, the share of the issuer company gets listed in Stock Market.
Where do I start and what are the initial help I can expect from MUDS?
MUDS is a premier service that provides all kinds of corporate services to its clients. Client’s satisfaction is core concern of MUDS. Thus, professionals at MUDS always strives to provide a complete solution for all consultancy and management needs. Team of experts are from different domains who work in-house and provide all solutions under one roof for prompt delivery at very competitive costs.
MUDS is committed to ease out the entire business process of its clients with its clout and pool of best resources available in the industry.
- Floating an IPO or launching an FPO takes time and careful planning with lots of expertise from different domains. They need to hire underwriters, audit companies, attorneys for advice. MUDS offer services end to end service
- MUDS makes investor understand the view and objectives of such an issue and make them acquainted with all the aspects of floating an IPO/FPO with due clarity.
- MUDS not just make them plunge in for something as big as this before appraising client with the current investment climate, performance of the industry as such and give a glimpse of the investor’s appetite
- MUDS guides its clients through entire process of issuance, registration, and administration of IPO and FPOs.
- Helps them in following special regulations, guidelines & rules.
- Assist in overall coordination and act as an interface between the company and the SEBI/NSE/BSE
- Assist in overall coordination of appointment of lead managers and the syndicate if the services are to be taken from outside
- After completing the due diligence, MUDS help finalize the disclosure document.