Raising Capital in the Financial Markets Essay Example | Topics and Well Written Essays - 1500 words

Raising Capital in the Financial Markets - Essay ExampleTotal beauteousness capital of a participation is divided into equal units of small denominations, each called a share. The company and merchant banker are however required to give exuberant disclosures of the parameters which they had considered while deciding the publishing price. There are two types of publicizes one where company and Lead Merchant Banker fix a price (called fixed price) and other, where the company and the Lead Manager (LM) stipulate a floor price or a price band and leave it to market place forces to determine the final price. (Thompson 27)Primarily, issues bottomland be classified as a Public, Rights or Preferential issues (also known as semiprivate placements). While public and rights issues involve a detailed procedure, private placements or preferential issues are relatively simpler. The classification of issues is illustrated belowInitial Public Offering is when an unlisted company makes each a fresh issue of securities or an offer for change of its existing securities or some(prenominal) for the first time to the public. This paves way for listing and trading of the issuers securities. An Initial Public Offer (IPO) is the merchandising of securities to the public in the primary market. It is when an unlisted company makes either a fresh issue of securities or an offer for exchange of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuers securities. An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuers securities. The sale of securities can be either through book building or through normal public issue.A follow on public offering (Further Issue)A fo llow on public offering is when an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, through an offer document. Rights IssueRights Issue is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date. The rights are unremarkably offered in a particular ratio to the number of securities held prior to the issue. This route is best suited for companies who would like to raise capital without diluting stake of its existing shareholders.A Preferential issueA Preferential issue is an issue of shares or of convertible securities by listed companies to a select group of persons which is neither a rights issue nor a public issue. This is a faster way for a company to raise equity capital. The issuer company has to comply with the all the regulations and the requirements laid down by the appropriate agencies pertaining to preferential allotment in Financial Market guidelines wh ich inter-alia include pricing, disclosures in notice etc.Courtesy Dyjan A All About coin page-52Issue priceThe price at which a companys shares are offered initially in the primary market is called as the Issue price. When they begin to be traded, the market price may be above or below the issue price.Market CapitalizationThe market value of a quoted company, which is calculated by multiplying its underway share price (market price) by the number of shares in issue is called as market capitalization.Listing of SecuritiesListing means admission of securities of an issuer to trading privileges on a stock exchange through a formal agreement. The prime objective of admission to dealings on the exchange is to provide liquidity and marketability