11

Public Offer of Securities and IPOs

2

1• Overview of Securities Market

2• Overview of Initial Public Offer

3• Offer For Sale

4• Acquisition Window

5• Statistics

Agenda

2

Exchange of Ideas

3

Purpose of Stock Exchanges

4

Stock Exchange

Allow companies to raise equity from investors and for investors

to invest in good companiesProvide investors a market to

buy and sell securities

Primary Market Secondary Market

Trading Process

5

Seller Buyer

BrokerBroker

Exchange

Bank Clearing Corporation Depository

1

2 2

3

44

3

6 6

7 71

5

The clearing banks and the depositories provide the necessary interface between the custodians/clearing members for settlement of funds and securities obligations of trading members

Clearing and Settlement - Purpose

6

To determine funds and securities obligations of the trading members

To settle the trade through exchange’s robust settlement process

Clearing and Settlement Process

7

Exchange

Clearing Corporation

Depository

Clearing Bank

Custodian / CM

1

32

4 11

6

8 9

7

10 5

T+2 Rolling Settlement – T+1 activities

8

Confirmation of the institutional trades. Provision of exception window available for late confirmations. Time limit and the additional charges for the exception window to be decided by exchanges.

The exchanges / Clearing House / Clearing Corporation process and download obligation files to the brokers’ terminals

DPs accepts instructions for pay-in of securities by the investors in physical form at least upto 4 p.m. and in electronic form by 6 p.m.

The depositories accept the requests from DPs for ‘same day processing’.

T+2 Rolling Settlement – T+2 activities

9

Depository permits downloading of the pay-in files of securities and funds from broker pool accounts

Depository processes pay-in requests and transfers the consolidated pay-in files to the Clearing Corporation

The Exchanges / Clearing Corporation execute pay-out of securities and funds to the Depositories and Clearing Banks

Depositories and the Clearing Banks complete the process by 2:00 p.m.

Overview of Regulatory Framework

10

SCRA And Rules SEBI Act Stock Exchange Requirement Companies Act

SEBI(ICDR) Regulations

Syndicate Member

Underwriter

Registrar to Issue

Depositories

Company/Issuer to initiate process

Preparation of Prospectus and due diligence by Merchant Banker

Checking compliances and in-principle approval by BSE

Go ahead by SEBI

Engagement of various Intermediaries to fulfill

various obligation

Old Process of Initial Public Offer (T + 60 days)

11

Company

Exchange

Investor

RTA

Bank

1

2

345

1. Investor submits application and cheque

2. Application checked and basis done

3. Application sent to exchange for registration

4. Draw list of allotees, allotment letters, share certificates

5. Allottee approval

6. Company issues shares

7. Capital transferred to company and shares transferred to investors along with capital for unallotted shares

7

6

7

7

Initial Public Offer Issue Process (T + 12 days)

12

Grading Agency

Syndicate Bank

Broker

Legal Counsel

Regulator

Lead Manager

Exchange

Escrow Bank

Syndicate Member

Depository

RTA

1

23

5

9

6

4

10

2

2

3

5

6

7

8

9

10 5

5

Company Investor

Streamlining Initial Public Offer Issue Process (T + 6 days)

13

Grading Agency

SCSB (ASBA)

DP/RTA/BROKER

Legal Counsel

Regulator

Lead Manager

Exchange

Escrow Bank

Syndicate Member

Depository

RTA

1

23

5

9

6

4

10

2

2

3

5

6

7

8

9

10 5

5

Company Investor

Day Activity

T+1 Registrar to get the electronic bid details from the stock exchanges

by end of the day and give to SCSB SCSBs to continue / begin blocking of funds

T+2

Issuer, merchant banker and registrar submit relevant documents to stock exchange(s)

SCSBs send confirmation of funds blocked to registrar Registrar reconciles compiled data from the stock exchange(s) and

SCSBs

T+3

Registrar to finalize basis of allotment and submit to designated stock exchange (DSE) for approval.

Designated Stock Exchange(s) to approve the basis of allotment Registrar to prepare funds transfer schedule and issue funds

transfer instructions to SCSBs

Streamlining Initial Public Offer Issue Process – Day wise activity

14

Day Activity

T+4

SCSBs credit funds in public issue account of the issuer who allotment.

Registrar/Issuer initiates corporate action for credit of shares to allottees.

Issuer and registrar file allotment details with DSE Registrar sends bank-wise data of allottees, amount due on shares

allotted, if any, and balance amount to be unblocked to SCSBs.

T+5

Registrar receives confirmation of demat credit from depositories. Issuer/registrar file confirmation of demat credit, lock-in and

issuance of instructions to unblock ASBA funds, with stock exchange(s).

Issuer make listing application to stock exchange(s) who give listing and trading permission.

Issuer, merchant banker and registrar publish allotment advertisement and stock exchange(s) issue commencement of trading notice.

T+6 Trading commences

Streamlining Initial Public Offer Issue Process – Day wise activity…contd.

15

16

1. Shares delivered to clearing house account through broker before issue opens and /Intimated to Exchange

2. Bids placed and funds blocked

3. File for basis of allotment with SE

4. Allocation instructions

5. Instructions for clearing house and shares tendered for pay in

6. Transfer of shares to pool account of trading members and to investor

7. Pay out of funds and transfer of balance shares if any to promotor/company

Offer For Sale (OFS)

Broker

Investor

Clearing Corporation

Exchange

Merchant Banker/

RTA

Promotor/Company

Trading member Pool a/c

1

4

56

6

7

2

2

2

1

1

36

COAL INDIA LTD

Issue Date January 30, 2015 Total Consideration (Rs. Cr) 22,557.62

Retail Issue Size 126,327,288 Cumulative Quantity (Retail) 55,647,668

Non Retail Issue Size 505,309,152 Cumulative Quantity(Non-Retail) 619,594,231

Issue Size (shares) 631,636,440 Cumulative Quantity 675,241,899

Cases

17

RURAL ELECTRIFICATION CORPORATION LIMITED

Issue Date: April 8, 2015 Total Consideration (Rs. Cr) 1610.09

Retail Issue Size 9,874,590 Cumulative Quantity (Retail) 89,075,112

Non Retail Issue Size 39,498,360 Cumulative Quantity(Non-Retail) 184,107,713

Issue Size (shares) 49,372,950 Cumulative Quantity 273,182,825

For Delisting, Open Offer or Buy Back

Use of Exchange platform as an alternate means for acquisition of shares

Robust secondary market operating process that seamlessly links the investor, broker, exchange platform, the clearing corporation, the clearing banker and the depository

Tax benefit of using an Exchange platform

Robust clearing and settlement mechanisms of secondary market brings efficiency in the system

Acquisition process under the regulatory framework of Exchange bringing trust in the market

Real time disseminate of information brings transparency in the process

Acquisition Window – Salient Features

18

19

1. Shares delivered to pool a/c

2. Shares tendered to Clearing Corporation

3. Bid placed

4. Filed for basis of allotment

5. Allocation instructions

6. Instructions for clearing house

7. Pay in of funds

8. Pay out of shares to acquirer / Pay out of funds to trading member and balance shares if any

9. Funds delivered to shareholders

Acquisition Window

1

2

3

4 5

6

7

8

9

Trading member Pool a/c

Acquirer

Clearing Corporation

Exchange

Merchant Banker/

RTA

Shareholder

8

Initial Public Offer Issue in India - Statistics

Debt-IPOs Equity-IPOs Total IPOs0

40

80

120

160

56

115

171No. of Issues (2013 till November 2015)

Debt-IPOs Equity-IPOs Total IPOs0

25,000

50,000

75,000

100,000

62,353

17,394

78,511

Amount Raised (2013 till November 2015)Am

ount

(Cro

re)

As on January 8, 2016, 119 SME Companies listed on BSE vis-à-vis 10 companies on Other Exchanges.

Amount raised Rs. 918 crore

Out of 119 companies, 12 companies have migrated to the main board of the Exchange

Market capitalization of the companies listed on SME platform Rs. 7,165 Crores

No. of Market Makers – 93

Average investors per issue - 200

SME - Statistics

21

As on November, 149 companies have completed their OFS issues

BSE appointed the Designated Stock Exchange in 126 (~85%) OFS issues.

Over 500 members have participated in OFS via BSE platform.

The process has helped the Government to raise over Rs. 37,520 Crs through divestment of holdings in PSUs.

83 OFS issues have been conducted exclusively only on BSE Platform

Offer For Sale - Statistics

22

BSE NSE0%

25%

50%

75%

100%77%

23%

OFS Bid Share

BSE Desig

nated Exchange

Only BSE

NSE Desig

nated Exchange

Only Nse

0255075

100

43

83

185

No of OFS issues since the beginning

Offer to Buy

Buyback

Bayer Cropscience Ltd.

Book Size (Shares) 12,65,000

Issue Size (Rs.crs) 506

Delisting

ESSAR Oil Ltd.

Book Size (Shares)14,24,89,858

Issue Size (Rs.crs) 2081

Takeover

Tide Water Oil (India) Ltd.

Book Size (Shares) 2,26,512

Issue Size (Rs.crs) 396

23

Statistics

Buyback

Issue Size (Rs.crs)1,256

No. of issues 8

Delisting

Issue Size (Rs.crs) 3,111

No. of issues 4

Takeover

Issue Size (Rs.crs)

558

No. of issues 9

Total

Issue Size (Rs.crs) 4,925

No. of issues 21

24

25