IPO Rocket.com

Lucina asks:

hi, i had applied for bcil ipo for one lot at 6300 rs. (18 * 350 shares). but now the date has been extended and the issue price has been revised to 14 rs.
now can u tell me wat wil happen plz?
they will return my money, and i have to apply freshly,
or
they will adjust my applied amount of money to current issue price?
plz tell me wat exactly will happen.

Rose asks:

can any new company can bring its ipo at some premium

Caridad asks:

Alibaba.com is listing its shares in the hongkong stock exchange in the last week of october/1st week of nov. How do i participate in this ipo?

Frederic asks:

i want to buy visa stocks, but i don’t know when it finally starts trading today, yahoo doesn’t even have it in its list when searching, and google has no progress for it for today.

Pamila asks:

Who participate in IPO activities?

Shanon asks:

No matter what the market is doing this month or this quarter, there are still strong, pre-public companies looking for growth capital to expand into new markets, launch new, wanted products, or too simply increase market share.

Down markets usually close the doors for IPOs or new secondary offerings.  Thus, companies poised to take the next step, going public, are forced to pull their registration and wait, or hope, for a quick turn in the economy.  Globally, 83 companies pulled their IPOs and some 24 others postponed their offerings during the first quarter of this year; mostly citing declining markets and recession concerns per The New York Times.

So, what can these companies do?

Many are looking too venture capital to raise enough cash to get them through the next few months or years until the IPO windows open again.  But, Venture Capital comes with many strings that could be detrimental or hindering including lost of control and dilution.

There are other ways – private placements.

According to Wikipedia, ‘…a private placement is an offering of securities that are not registered with the Securities and Exchange Commission (SEC). Such offerings exploit an exemption offered by the Securities Act of 1933 that comes with several restrictions, including a prohibition against general solicitation. This exemption allows companies to avoid quarterly reporting requirements and many of the legal liabilities associated with the Sarbanes-Oxley Act.’

There are some caveats regarding the amounts that can be raised through private placements.  Under 504, companies can raise up to $1 million in a 12-month period.  Under 505, companies can raise up to $5 million in a 12-month period – with restrictions to the type and number of investors.  Under 506, companies can raise any amount provided their investors meet very strict guidelines – usually institutional investors including banks and financial institutions, pension funds, and insurance companies who are still, despite declining markets, liable for hundreds of billions in capital that must be efficiently put to work.

Benefits of private placements for companies include:

-         Can be used by mature companies, start-ups, or anything in between.

-         Much lower cost to issue than an IPO.

-         Little or no reporting requirements.

-         Limit the amount of information that a company has to disclose by limiting the number and type of investors.

-         Can issue debt and/or equity.

-         Can raise capital quickly.

-         Great for small issues or issues encumbered by complex security measures. And most important,

-         Can be sold to some of your stakeholders like your suppliers, your distributors, your retailers, or your franchisees – companies that already know you and respect your organization.

In conjunction with these private placements, the SEC has adopted Rule 144A of the Securities Act of 1933 that allows these securities to be traded amongst each other – provided the seller and investor are qualified institutional buyers with over $100 million in investable assets.  The goal of this rule was to create liquidity for these private, restricted shares as well as foster foreign companies to seek equity in the US market.

John Jacobs, Executive Vice President of Nasdaq, stated, “The amount of capital raised last year (2006) through the 144A market - $162 billion – was bigger than all the IPOs and secondary offerings on Nasdaq, the NYSE, and Amex put together.”

Further, the 144A market continues to grow as organizations like the Nasdaq are creating electronic trading platforms for these private placements.  Prior to these new trading platforms, investors of these shares were extremely limited with these investments.  They would typically buy and hold these securities until the investee went public.

Bottom line, if your company needs public type money but does not want to wait for the IPO markets to reopen, private placements may be the way to go.  Start by talking with you CPA, your national bank, or your investment banker.

Bennie asks:

With the onset of technology and its augmentation, everything today has become ‘online’ and this includes trading! All non-residents today trade online. Almost all the registered brokers today offer Online Trading facility in Equities for non-residents.

But of course, there are certain prerequisites for being able to trade online. The non-resident must have/open:

1. Bank account with a Portfolio Investment Scheme (PIS) Designated Bank (DB)

2. Demat account with broker

3. Broking account with broker.

Before proceeding further, let us tell you what exactly all these accounts are.

PIS Account: Portfolio Investment Scheme, better known as PIS, account is mandatory for all Indians living abroad, and enables non-residents to invest in the shares of Indian companies based on repatriation or non-repatriation, in respect of shares or convertible debentures sold or purchased through a registered stock broker on a recognized stock exchange. Please note that other means of acquiring shares (like bonus shares, shares purchased through IPO etc.) is not covered under this scheme.

Demat/DMAT Account: Dematerialised or DMAT account is similar to any conventional bank account, the only difference being that the latter deals with money, while the former deals with sale and purchase of stocks. Maintained with a Depository and opened through a Depository Participant (DP), we at nriinvestindia.com help our clients to open such an account in India.

Broking/Trading Account: The name might sound complex, but trading account is nothing but an account opened with a stock brokers, enabling you to buy and sell shares or any other financial instruments through them.

Now that you know what these accounts mean, we now proceed to tell you how to open these accounts, and the various documents you will need, if any, for the same.

Opening a Bank Account with a PIS DB: To invest in the secondary market, non-residents require the permission of the Reserve Bank of India (RBI), and for this you need to open a bank account with a DB under the PIS. The fund for investment in the market has to be routed through the PIS Bank account. The brokers can have a tie-up with UTI Bank, HDFC Bank, IndusInd Bank etc for this purpose since these are the DB of the RBI, and can hence issue RBI approval to non-residents. The account can be opened based on whether you want benefits of repatriation upon investing (NRE Account) or do not wants benefits on repatriation upon investing (NRO Account). Brokers will send you a trading account opening kit enclosed with the application forms for opening Bank account as well with any one of the above-referred DB under the Portfolio Investment Scheme. This will facilitate online trading for non-residents around the world.

Upon receiving these forms, the DB will open two bank accounts – a PIS account and non-PIS account. All investments and sale proceeds will be done through the PIS account. Please remember that the PIS account needs to be funded before the broker can make investments. The non-PIS account functions like any usual Savings Bank non-resident account, and transactions other than those under the PIS account will be routed through the non-PIS account. In case of NRO accounts, the non-PIS transaction would include payment to IPO and ESOP, dividend payment, amongst others.

You need to produce the following documents while opening a PIS account:

* Attested copy of Passport.

* Attested copy of Valid VISA copy /Work permit (Iqqama for middle east countries).

* Details of existing shares holding both in NRI status & resident status duly signed.

* 3 Passport size Photographs.

The DB shall send the A/c opening intimation directly to the clients & a copy of the RBI approval is delivered to the broker. On receipt of the RBI approval from the DB, the broker proceeds to the next step - opening a Demat and Broking account.

Opening a DMAT account with a broker: Based on RBI’s approval, the broker will open the DMAT account in the same status (NRE or NRO) and pattern (Joint or Single) as is the account with the bank. Shares are held here in an electronic form and shares bought by the client get credited on the second working day from the day of purchase. Example: Shares bought on Monday will be credited on Wednesday; those bought on Tuesday will be credited on Thursday, and so on.

Opening a Broking/Trading account with a broker: Broking account is a trading account with the help of which the client does the transactions of ‘buy’ and ‘sell’ in the Secondary Market. The broking account is opened after the DMAT account gets opened, and the former is linked with the latter.

Now that you know the process of opening the various accounts, we will now inform you, in detail, about the trading process and the transactions of ‘buy’ and ‘sell’.

Trading process: To enable the client to trade, the client is given, generally, a Trade Login User ID and a password. All the client has to do is place the “Buy” and “Sell” Orders on the Broker’s Trade Page. Most of the Brokers have user-friendly Trading System thus ensuring that the client has a pleasant trading experience.

Buy: By moving funds in her/his PIS account to the broker, the client can initiate a ‘buy’ transaction. The movement of the fund is done in less than a minute and accordingly the Trading Limit is updated facilitating the client to buy shares. Once the NRI has bought and/or sold the balance money, if any, the same has to be transferred by the client from her/his PIS account on receipt of the trade confirmation, and the Broker then sends it after the Market closes for the day. The National Stock Exchange (NSE) settles the delivery for shares bought on the second working day (example: if you bought a share on Monday it will be credited to your account on Wednesday and so on) from the Date of Purchase.

Sell: You need to have shares in your DMAT account to initiate a ‘sell’ transaction. The trading system would reject your order otherwise. The shares bought are, as mentioned above, credited to your account on the second working day and available for trade on the third day. The NSE settles the sale proceeds on the second day from the date of sale and the broker wires the money to the client’s PIS account, on the second day itself. The DB credits the proceeds into the client’s PIS account after Calculation Gains and deducting tax if any.

The client can get an update on the Broking account by looking at the ‘Accounts Statement’ on the broker’s trading website. The Daily Account Statement gives details of Funds Transfers - both for transfers done by the client to Broker & by Broker to the client’s PIS A/c and the date-wise break-up of shares bought or sold by the client.

VALUE ADDED SERVICES RENDERED BY THE BROKER FOR ONLINE NRI CLIENTS

A broker will not ONLY take care of your transactions. She/he provides a lot of innumerable services. These include:

One-stop shop: Most of the brokers will open all the three accounts for you by coordinating for the same with the DB. So all the applicant has to do is fill up the relevant forms and give it to the broker.

Trade confirmations: Brokers will email you the details of the trade done for the day which will include confirmation for the trade done and the brokerage fee charged for the same.

Report transaction: Brokers will report every transaction done by a client to RBI by the DB.

Contract notes: In addition to the emails, the client can view their Digital Contract notes on the website.

PIS account queries/reconciliation: In order to ensure that the PIS account is regular, the broker shall coordinate with the DB and clarify all queries related to PIS transactions. Please note that every transaction done in the Trading account has to be reported through the DB.

Offline orders: Some brokers accept offline orders through emails, fax, and even over the phone, after confirming the identity of the client, thus permitting even those who do not have access to Internet/Computer. The brokers may also offer opening an account for liquidating the shares bought in Primary Market. They will also obtain the Auditor’s Certificate for such sales and the proceeds will be credited to your NRE/NRO Account after the tax has been deducted.

Processing of IPO Applications: The broker, on behalf of NRI clients, can apply for IPO relieving the client off the paper work. All the client has to do is indicate the number of shares to be applied for, either through an email or by filling the online application available on the broker’s website (most of the brokers provide such services).

TIP – Recommendation/Call of Stocks: Thanks to technology, brokers, today, send SMS and/or email alerts keeping their clients updated about the market. Clients having considerable holding in a particular stock also receive price alerts in addition to the latest market news.

Online helpdesk: Due to the boom in technology, brokers today are able to assist their clients through an ‘online helpdesk’, hence certifying that suggestions/solutions are provided to the clients immediately.

TRADING PROCESS

Non-residents require the following documents depending on whether they are NRI, PIO or OCI:

Non-Resident Indian (NRI) requires PAN Card and a copy of the Indian Passport.

Person of Indian Origin (PIO) requires PIO Card, copy of Foreign Passport showing Indian birthplace and PAN Card.

Overseas Citizen of India (OCI) requires copy of OCI Card and PAN Card.

For further details please contact us at: contact@nriinvestindia.com or you may checkout the website: www.nriinvestindia.com

Non-residents can invest in both Primary and Secondary Markets with the help of a registered broker. These brokers offer a wide range of services warranting that the clients feel at home while making investment decisions.

THINGS NON-RESIDENTS CAN DO

Vis-à-vis trading, non-residents today can do various kinds of trading as per their convenience. Some of them include:

Online Trading (stocks and derivatives)

Various brokers give you tools used by institutions and professionals for trading in the Capital Market. Many of them provide an Online Trading Platform certifying non-residents to transact paper-free trading in ‘Equities and Derivatives’ segments. Such Online Trading System provides the most distinct services like Streaming Market Watch, Technical Analysis, AMO (After Market Order), Online Funds Transfer and NRI Online Helpdesk facilitating you to have a pleasant trading experience.

Offline Trading

As said earlier, brokers, today, allow clients to place orders for trade through phone, email and/or fax.

Mutual Fund Investments

Non-resident can invest in Indian Mutual Funds with the help of registered distributors or brokers. Some of them also offer simplified process that is free of all paperwork. These distributors also provide updates on the latest top funds, NAV, and new fund offer. They also provide performance report of various funds to ensure smart investments are made in the Mutual Fund segment.

Investment in Initial Public Offer (IPO)

Investors can make paper-free investments through select brokers in the Primary Market – Initial Public Offer (IPO). Various details such as current and upcoming IPOs, performance of past IPOs, basis of allotment etc are provided by them making possible for their clients to make hassle free IPO investments.

ESOP Trading

By offering value added service in the form of ESOP Trading, few good brokerage houses enable clients to liquidate the Stock Option given by their Employers and remit abroad the sale proceeds or reinvest the same in the Secondary Market.

Dematerialisation of Shares bought in Primary Market

Usually brokers assist clients to convert their physical share certificates to electronic form (DMAT Form). All that the client has to do is open a NRI account and submit the DMAT Request along with the necessary certificates, and your broker will take care of everything else.

Important: The content above provides general information regarding how brokers help non-residents to open a trading account and let them trade. However, services and regulations may differ from broker to broker. Please check with your chosen broker for the same.

Fatima asks:

India Bull DP record is updated with proper bank account details including 9 digit MICR code. but still i get refund Physical cheque instead of DIRECT ECS CREDIT IN CITI BANK, Pl Guide what updation is required in Citi Bank or India Bull Account to get ECS Credit