Write the Methods of Flotation of New Issues in Primary Market

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asked Jan 12, 2018 in Business Studies by jisu zahaan (28,760 points) 26 374 807
Write the Methods of Flotation of New Issues in Primary Market

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answered Jan 12, 2018 by faiz (82,347 points) 6 6 11

1. Offer through Prospectus/ Initial Pubic After: It involves inviting subscription from the public through issue of prospectus. A prospectus makes a direct appeal to investors to raise capital through an advertisement in newspapers and magazines.
2. Offer for Sale: Under this method security are offered for sale through intermediaries like issuing houses or stock brokers. The company sells securities to intermediary/broker at an agreed price and the broker resells them to investors at a higher price.
3. Private Placements: It refers to the process in which securities are allotted to institutional investor and some selected individuals.

4. Rights Issue : It refers to the issue in which new shares are offered to the existing shareholders in proportion to the number of shares they already possess.
5. e-IPOs : It is a method of issuing securities through an on-line system of stock exchange. A company proposing to issue capital to the public through the on-line system of the stock exchange has to enter into an agreement with the stock exchange. This is called an e-initial public accepting applications and placing orders with the company.

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