ISSUE OF SECURITIES - Sangeet Kedia Classes

ISSUE OF SECURITIES
SEBI (ICDR) Regulations on Anchor Investor
Anchor Investor means a Qualified Institutional Buyer who makes an application for a value of
ten crore rupees or more in a public issue made through the book-building process in accordance
with SEBI (ICDR) Regulations, 2009.
Out of the portion available for allocation to QIBs, allocation to Anchor Investors may be made
subject to following conditions :
a) An Anchor Investor shall make an application of a value of at least Rs. 10 crore in the public
issue;
b) Allocation to Anchor Investors shall be decided at the discretion of the company and
merchant banker, subject to certain prescribed conditions;
c) Upto 60% of the portion available for allocation to qualified institutional buyers shall be
available to anchor investor(s) for allocation/allotment (“anchor investor portion”);
d) One-third of the anchor investor portion shall be reserved for domestic mutual funds;
e) The bidding for Anchor Investors shall open one day before the issue opening date;
f) Anchor Investors shall pay on application the same margin which is payable by other
categories of investors, the balance, if any, shall be paid within two days of the date of
closure of the issue;
g) Allocation to Anchor Investors shall be completed on the day of bidding by Anchor
Investors;
h) If the price fixed as a result of book building is higher than the price at which the allocation
is made to Anchor Investor, the Anchor Investor shall bring in the additional amount.
However, if the price fixed as a result of book building is lower than the price at which the
allocation is made to Anchor Investor, the excess amount shall not be refunded to the Anchor
Investor and the Anchor Investor shall take allotment at the price at which allocation was
made to it;
i) The number of shares allocated to Anchor Investors and the price at which the allocation is
made, shall be made available in public domain by the merchant banker before opening of
the issue.
j) There shall be a lock-in of 30 days on the shares allotted to the Anchor Investor from the date
of allotment in the public issue.
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ISSUE OF SECURITIES
SANGEET KEDIA [F.C.S., LL.B.]
ILLUSTRATION REGARDING ALLOTMENT TO QUALIFIED INSTITUTIONAL BUYERS
OTHER THAN ANCHOR INVESTORS [ISSUE AS PER REGULATION 26(1)]
1) Issue Details
Sr. No.
Particulars
Issue details
1.
Net Offer to the Public
200 crores equity shares
2.
Portion available to QIBs*
100 crore equity shares
3.
Anchor Investor Portion
60 crores equity shares
Portion available to QIBs* other than anchor
4.
40 crores equity shares
investors [(2) - (3)] of which
(a)
Reservation to MF (5%)
2 crores equity shares
(b)
Balance for all QIBs including MFs
38 crores equity shares
5.
No. of QIB applicants
10
6.
No. of shares applied for
500 crores equity shares
* Where 50% of the net offer to the public is required to be allotted to QIBs.
2) Details of QIB Bids
S. No.
Type of QIB bidders
No. of shares bid for (in crores)
1.
Al
50
2.
A2
20
3.
A3
130
4.
A4
50
5.
A5
50
6.
MF1
40
7.
MF2
40
8.
MF3
80
9.
MF4
20
10.
MF5
20
TOTAL
500
A1-A5
(QIB bidders other than MFs)
MF1-MF5
(QIB bidders which are MFs)
3) Details of Allotment to QIB Bidders/Applicants (No. of equity shares in crores)
Type of
Equity
Allocation of 2 crores
Allocation of balance 38
Aggregate
QIB
shares
equity shares to MFs
crores equity shares to
allocation
bidders
bid for
proportionately
QIBs proportionately
A1
50
0
3.8
3.8
A2
20
0
1.52
1.52
A3
130
0
9.88
9.88
A4
50
0
3.8
3.8
A5
50
0
3.8
3.8
MF1
40
0.4
3.04
3.44
MF2
40
0.4
3.04
3.44
MF3
80
0.8
6.08
6.88
MF4
20
0.2
1.52
1.72
MF5
20
0.2
1.52
1.72
500
2
38
40
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ISSUE OF SECURITIES
SANGEET KEDIA [F.C.S., LL.B.]
Pricing for Preferential Issue of Equity Shares
Pricing in case of Frequently Traded Shares :
“Frequently Traded Shares" means shares of an issuer company, in which the traded turnover on
any stock exchange during the twelve calendar months preceding the relevant date, is at least ten
per cent of the total number of shares of such class of shares of the issuer company:
Provided that where the share capital of a particular class of shares of the issuer company is not
identical throughout such period, the weighted average number of total shares of such class of
the issuer company shall represent the total number of shares.
"Weighted Average Number of Total Shares" means the number of shares at the beginning of a
period, adjusted for shares cancelled, bought back or issued during the aforesaid period,
multiplied by a time-weighing factor.
The issue of frequently traded shares on a preferential basis can be made at a price not less than
the higher of the following :a) The average of weekly high and low of the volume weighted average price of the related
shares quoted on the stock exchange during twenty-six weeks preceding the relevant date;
OR
b) The average of weekly high and low of the volume weighted average price of the related
shares quoted on the stock exchange during the two weeks preceding the relevant date.
“Relevant Date” means a date 30 days prior to the date on which the general meeting of the
company is held in terms of Section 62(1)(c) of the Companies Act, 2013.
“Stock Exchange” means the stock exchange in which the highest trading volume has been
recorded during the twenty-six weeks preceding the relevant date.
"Volume Weighted Average Price" means the product of the number of equity shares traded on a
stock exchange and the price of each equity share divided by the total number of equity shares
traded on the stock exchange.
Where the equity shares of a company have been listed on a stock exchange for a period of
less than twenty-six weeks as on the relevant date, the issue of shares on a preferential basis
can be made at a price not less than the higher of the following :
a) The price at which shares were issued by the company in its IPO or the value per share
arrived at in a scheme of arrangement u/s 391-394 of the Companies Act, 1956 pursuant
to which shares of the company were listed, as the case may be;
b) The average of weekly high and low of the volume weighted average price of the related
shares quoted on the stock exchange during two weeks preceding the relevant date;
c) The average of the weekly high and low of the volume weighted average price of the
related shares quoted on the stock exchange during the period shares have been listed
preceding the relevant date.
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ISSUE OF SECURITIES
SANGEET KEDIA [F.C.S., LL.B.]
It may be noted that on completion of twenty-six weeks, if the price computed as above is less
than other computation as per twenty-six weeks average, then the difference shall be paid by the
allottee to the company.
Pricing in case of Infrequently Traded Shares :
Where the shares are not frequently traded, the price determined by the issuer shall take into
account valuation parameters including book value, comparable trading multiples, and such other
parameters as are customary for valuation of shares of such companies.
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ISSUE OF SECURITIES
SANGEET KEDIA [F.C.S., LL.B.]