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Equity Capital Markets – Public Issue : Part 8

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Equity Capital Markets – Part 4: Public Issue

← Back to Part 3: Valuation Techniques

What is a Public Issue?

A Public Issue is when a company raises funds by offering its shares to the general public. It is regulated by SEBI and helps companies expand their capital base.

Types of Public Issues

  • Initial Public Offering (IPO): First-time offer of shares to the public
  • Follow-on Public Offer (FPO): Additional shares issued by an already listed company

Offer for Sale (OFS)

OFS allows promoters or major shareholders to sell their shares to the public. It doesn't raise new capital but offers exit opportunities.

Public vs. Private Placement

  • Public Issue: Open to all investors
  • Private Placement: Offered to a select group like institutions or HNIs

Book Building vs. Fixed Price Issue

  • Book Building: Price discovered through investor bids
  • Fixed Price: Price pre-decided and declared in the prospectus

Categories of Investors

  • Retail Individual Investors (RIIs)
  • Qualified Institutional Buyers (QIBs)
  • Non-Institutional Investors (NIIs)

Underwriting

An underwriter ensures that the issue is subscribed. If investors don't subscribe fully, underwriters purchase the remaining shares. Investment banks or brokers often act as underwriters.

Regulatory Framework

  • SEBI regulates the process to ensure transparency and fairness
  • Stock exchanges approve listing and compliance

Case Example

LIC's IPO (2022) was one of India’s biggest public issues. It raised over ₹21,000 crores, with QIBs, retail, and policyholders participating.

← Back to Part 3: Valuation | Go to Part 5: IPO Application & RHP →

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