Category 1 merchant banking Services Introduction for entrepreneurs

The field of merchant banking keeps evolving with time, while the basic purpose remains constant which is to provide financial services to businesses. Issue management is a substantial service provided by category I merchant banker, when a company decides to go public. It would include deciding size and price of the issue, confer with Sebi regulations, and underwriting of the issue. However, category II merchant banks are also authorized to acts as underwriters. This recognition is given by SEBI on basis of capital adequacy, infrastructure, and professional competence. Based on these parameters classification is done in four categories, a merchant banker with category I recognition is authorized to provide all major services.

The procedure of managing public issue includes two phases. Pre-issue activities include obtaining stock exchange approval, appointing underwriter, drafting and filing the prospectus, marketing of shares, grading of IPO, finalizing opening and closing dates for the issue. Post issue activities are confirmation of minimum subscription, supervision of allotment procedure, attending investor grievances, and submission of reports to Sebi. Among all these activities the issuer has to adhere to the issue management regulations of Sebi and the stock exchange where it is listing. The offer document needs approval from Sebi and addition of suggestions if any before filing it with the stock exchange. The document would contain critical information about the company and may go through various revisions before the actual price of securities is determined.

There are different methods in which securities can be offered in the primary market. The book building process is one most common and widely followed by companies, it is a price discovery method in which bids are invited from buyers, The issue price is determined on basis of bids received, stating the price and a number of shares investors want to buy. Besides book building method, securities are offered through prospectus method, private placement method, offer for sale method and right issues. Each method has its own mechanism making it different from others.

CCV is a brand for securities market consultancy services registered as a category I merchant banker. It has quality infrastructure and professional expertise to provide risk-free financial services to clients. CCV has emerged with a team of professionals working closely with stock exchanges and providing services within the security regulations of Sebi.