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PRIMARY MARKET
DEVI PRIYA P 2022201001

ASHVADHARANI R 2022201008
LOGEETHA S V 2022201015
KEERTHANA SIVAALI M 2022201022
SUDHARSAN M H 2022201029
SIVASREE A 2022201037
KARTHIK B 2022201046
ROSHINI DEVI V J 2022201054
INTRODUCTION
• Primary capital market is a segment of the financial
market where new securities are issued and sold to
investors for the first time.
• It enables companies, government entities, and

organizations to raise capital for business expansion,
infrastructure projects, research and development, and
other funding requirements.
Regulatory Framework in India
• Securities and Exchange Board of India(SEBI): The primary capital
market in India is regulated by SEBI. The country’s apex regulatory
body for securities markets. SEBI ensures fair practices, investor
protection, and market integrity.
• Companies Act, 2013: The Companies Act governs the issuance of

securities by companies and provides guidelines on the process of
raising capital from the primary market.
FINANCIAL
INSTRUMENTS
1. Debt
2. Equity
FINANCIAL
INSTRUMENTS
• Equity shares
• Preference shares
• Debentures
• Convertible debentures
• Warrants
• Cumulative Convertible
Preference shares
• Derivative Securities
• Borrowings from Financial
Institutions
Private
Placement
Private placement is a method of
raising capital by offering
securities to a select group of
investors instead of the general
public.
Unlike in public offerings, private
placements are exempt from
registration with the Securities
and Exchange Commission (SEC)
under certain conditions.
Defining Private Placement
W hat it is When to use it
Private placement is raising capital by offering It's a great way for startups to raise money while
securities to a group of accredited investors avoiding the costly and time-consuming process
instead of the public. of going public.
Typical investors Types of securities

Accredited investors, such as angel investors, Common stock, preferred stock, debt, and other
venture capitalists, and sometimes wealthy financial instruments are typical securities that can
individuals or family offices. be offered.
Participants in Private
Placement Investors
Investors are the accredited individuals or firms who purchase
private placement securities from issuers.
1 3
2
Issuers Investment banks
Issuers are the companies or Investment banks can act as intermediaries between issuers and
institutions that offer securities to investors, providing professional advice, underwriting services,
raise capital. and administrative support.
Regulatory
Requirements
Accredited Investor Form PAS-3 State Regulation
Rules
The securities issued in a Companies must file a Form Private placement is subject to
private placement can only PAS-3 with the ROC after state securities regulations
be offered to accredited selling securities so the requirements, including
investors who have a certain regulatory body can monitor registering to sell securities
level of financial their activities and ensure and filing reports with state
sophistication and net worth. compliance. regulatory agencies.
Advantages of Private
Placement
Simplified process Funding flexibility Exclusive investors
Private placement is Companies can offer Companies can choose

typically less expensive customized securities to precisely who they want to
and less regulated than suit the needs of specific fund their business and
going public via an IPO. investors and create typically have more
custom terms and control over who has
investment timeframes. ownership.
Government Securities
• Security - fungible, negotiable

financial instrument that holds
some type of monetary value
• A Government Security (G-Sec)
is a tradable instrument issued by
the Central Government or the
State Governments
Types of Government
Securities
Treasury Bills
State Development Loans
Cash Management Bills (CMBs)
Dated Government Securities
Treasury Inflation Protected Securities (TIPS)
Capital Indexed Bonds
Floating Rate Bonds
Zero-Coupon Bonds
Advantages of Government Securities
• Low risk
• Better yields than fixed deposits and savings accounts
• Fixed-income through coupons
Evolution of Pricing of IPO
Issue of pricing of IPO can be studied by taking 2 regimes
P r e - l i beral i sati o n Po s t - l i b e r a l i s a t i o n
Controller of Capital Issues (CCI) Securities Exchange Board of India (SEBI)
Before 1991 1991 onwards

Role of Merchant Banker in IPO
Process Companies use Services of Merchant Bankers who act as Issue managers
To determine Issue Price
Manage Issue of Securities

Issue Price
The Price at which shares are sold
The Price is set by investment bank that is

underwriting the IPO
A critical factor in setting issue price is

demand from potential investors
Another key consideration is company’s

financial situation
Listing Price
Price at which a company’s shares will be traded when they are first listed on a stock exchange
Determine Company’s share price from

financial filings or from a broker
Multiply share price by No.of shares

Market Price
Market’s Price is stock’s current trading price
Market Price is determined by Supply &

Demand in open market
When demand is high market price may

trade higher than issue price called “POP”
Cut-Off Price
This is the minimum price that company are

willing to sell their shares
Factors that affects price of IPO
Overall Market Conditions Type of Sector
The Company’s Financial Size of Offering
Total No. of stocks that are

Existing Price of Stock
being sold
How IPO is filed?
Appoint a Merchant
Banker
File a Draft Red Herring
Prospectus
SEBI wil comment &
review within 21 days
Re-File it with SEBI
File Prospectus
File Prospectus
File Prospectus
File Prospectus
How it works
[email protected]
• requires the underwriter to
call forth bids from various
institutional investors
• prospectus comprises the
price band
• The minimum price - floor
price and maximum price -
cap price.
• final price of the security -
cut-off price.
Participants
•Issuing company/issuer
•Bookrunners/underwriters
•Registrar
•Syndicate members
•Investor categories
Annual Review
Reverse book building
• Delist the company shares
• Find the price at which the shares are available for buyback
• Above or equal to floor price
Benefits
• Efficient Price Discovery
• Wider Investor Participation & Increased demand
• Flexibility in Pricing & Potential for Higher Proceeds
32
B E NE F I T S O F PRI MARY
MARKET
• Capital Formation: Provides platform for companies to raise capital, securities.
• Startups and Innovation: Promotes entrepreneurship and competition.
• Infrastructure development: By raising funds companies can undertake large scale

projects
• Diversification of Investment options: Provides wide range of investment options
• Enhanced Corporate Governance: Companies going public required to comply the

regulations.
33
Conclusion
• Role of SEBI
• IPO process
• Merchant banker
• Regulatory framework
• Financial instrument
• Private placement
• Government securities
• Price: Issue price, Listing price, Cut-off price

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PRIMARY MARKET

DEVI PRIYA P 2022201001

• It enables companies, government entities, and

• Companies Act, 2013: The Companies Act governs the issuance of

instead of the public. of going public.

Typical investors Types of securities

Simplified process Funding flexibility Exclusive investors

Private placement is Companies can offer Companies can choose

• Security - fungible, negotiable

State Development Loans

Cash Management Bills (CMBs)

Dated Government Securities

Treasury Inflation Protected Securities (TIPS)

Capital Indexed Bonds

Floating Rate Bonds

Before 1991 1991 onwards

To determine Issue Price

Manage Issue of Securities

The Price is set by investment bank that is

A critical factor in setting issue price is

Another key consideration is company’s

Determine Company’s share price from

Multiply share price by No.of shares

Market Price is determined by Supply &

When demand is high market price may

This is the minimum price that company are

The Company’s Financial Size of Offering

Total No. of stocks that are

Re-File it with SEBI

• Startups and Innovation: Promotes entrepreneurship and competition.

• Infrastructure development: By raising funds companies can undertake large scale

• Diversification of Investment options: Provides wide range of investment options

• Enhanced Corporate Governance: Companies going public required to comply the

• Price: Issue price, Listing price, Cut-off price

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