1. The primary market provides the channel for new securities to be sold to raise funds for companies' requirements through domestic or international issues. 2. Securities are sold at their face value, at a premium above face value, or at a discount below face value in the primary market. 3. The primary market includes various types of public issues like initial public offerings, rights issues, and further public offerings, as well as private placements.

1. PRIMARY MARKET

2. Primary Market
Provides the channel for sale of
new securities
to raise resources to meet their
requirements
issue the securities in domestic
market and/or international market.

3. Terminology
• Nominal or stated amount
assigned by issuerFace value
• When security sold above its
face valuePremium
• When security sold at less
than face valueDiscount

4. Classification of issue of shares
Issues
Public
Initial Public
Offering
Fresh Issue
Offer for Sale
Further Public
Offering
Fresh Issue
Offer for Sale
Rights
Private
Placement

5. Initial Public Offering (IPO)
Made by Unlisted Companies
Either Fresh
issues of
securities
An offer for sale
of its existing
securities
Both for the first
time to the public

6. Advantage of IPO
No Cost of
capital
Huge amount
can be raised
Brand Value
Correct
Valuation

7. Disadvantage of IPO
Disclosure of
information
Decision’s take
time
Cost of IPO

8. Parties to IPO
Registrar Underwriter
Lead
Manager
Merchant
Banker

9. Who decides the price of an
issue?
• When issuer & Lead
Merchant Banker fix a
priceFixed Price
• When the company and
Lead Manager stipulate
the price and leave it to
market forces
Price discovery
through Book
Building

10. Further Public Offering
When an already listed company
makes
Either fresh issue of securities to the
public
Or an offer for sale to the public
Through offer document

11. Rights Issue
When listed company issue fresh securities
To existing shareholder
Suites for companies who would like to raise
capital

12. Private Placement / Preferential
Issue
1.
• Issue of shares or convertible securities by
listed companies
2.
• Which is neither right issue nor a public issue
3.
• Faster way for company to raise equity
capital

13. Issue Price
Price at which
company shares are
offered
Initially in primary
market

14. Market Capitalization
• Market value of a quoted company1.
• MC = Market Price * No. of Shares2.

15. CAPS IN MARKET
Large cap
Mid cap
Small cap

16. Difference between Public Issue
& Private Placement
Public Issue
When issue made for
general public and any
investor at large.
As per companies
act, 1956, an issue
becomes public when result
it allotment to 50 persons or
more.
Private Placement

17. Book Building

18. Cut –Off Price
Any price which above the floor
price
Decided by Issuer & Lead
Manager
After considering the book &
investors appetite for the stock

19. Floor Price
It is the minimum price at which
bids can be made

20. Price Band
Price decided by The Company consultant with The
Merchant Banker
Cap should not be more than 120% of the floor price
The prospectus may contain
Either the floor price for the
securities
Price Band within which the
investor can bid

21. Documents in IPO
Prospectus
Draft Offer
Document
Abridged
Prospectus

22. Draft Offer Document
Offer document in draft stage
Filled with SEBI
At least 2 days prior to the filling of
the offer document with ROC

23. Abridged Prospectus
Shorter version of the
prospectus
Contains all the salient
features of a prospectus
Applications form of
public issues.

24. Lock in
Freeze on the sale of shares for a certain
period of time
Ensure that company should continue to
hold some minimum percentage
After public issue

25. Listing of Securities
Admission of securities of an issuer to
trading
Dealing on a stock exchange through a
formal agreement
Provide liquidity and marketability to
securities
Provide mechanism for effective control
& supervision of trading

26. Listing Agreement
• Specifies the terms & conditions
of listing1.
• Disclosures shall be made by a
company on continuous basis to
the exchange
2.

27. Delisting of Securities
Permanent removal of securities of a
listed company
From the stock exchange
Securities of that company no
longer be traded that stock exchange

28. How to apply in IPO’s ?
Online
Offline