What is floatation of securities? Explain the different methods of floating new shares.
What is floatation of securities? Explain the different methods of floating new shares.
Floatation of securities refers to where new securities like equities and bonds are issued in the primary market for raising funds. Methods of floating new shares are as follows :
(i) Public issue: Public issue is when an institution of a company (an issuer) offers or issues securities to new investors so that they become a part of issuer's stakeholder family. Public issues can be classified as Initial Public Offering (IPO) when an unlisted company makes fresh issues of securities for the first time and Further Public Offer (FPO) when an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public.
(ii) Rights issue: Rights issue is when a listed company proposes to issue fresh securities to its existing shareholders as on a record date.
(iii) Bonus issue: Bonus issue are free shares issued out of the issuer's reserves for existing shareholders as an alternative to dividend payout.
(iv) Private placement: The process where an issuer can issue securities to a selected number of investors not exceeding 49 investors is called private placement.
(v) e-IPOs (Electronic Initial Public Offer): e-IPOs is where investors can bid for new shares through the internet and mobile platforms under the proposals made by SEBI. Public Sector Undertakings (PSUs) securities will be provided a fast route track for share sales/purchases in order to meet their disinvestment targets.
Floatation of securities refers to where new securities like equities and bonds are issued in the primary market for raising funds. Methods of floating new shares are as follows :
(i) Public issue: Public issue is when an institution of a company (an issuer) offers or issues securities to new investors so that they become a part of issuer's stakeholder family. Public issues can be classified as Initial Public Offering (IPO) when an unlisted company makes fresh issues of securities for the first time and Further Public Offer (FPO) when an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public.
(ii) Rights issue: Rights issue is when a listed company proposes to issue fresh securities to its existing shareholders as on a record date.
(iii) Bonus issue: Bonus issue are free shares issued out of the issuer's reserves for existing shareholders as an alternative to dividend payout.
(iv) Private placement: The process where an issuer can issue securities to a selected number of investors not exceeding 49 investors is called private placement.
(v) e-IPOs (Electronic Initial Public Offer): e-IPOs is where investors can bid for new shares through the internet and mobile platforms under the proposals made by SEBI. Public Sector Undertakings (PSUs) securities will be provided a fast route track for share sales/purchases in order to meet their disinvestment targets.
