Question

Question # 3. briefly explain the purpose of following main sections of “Offer Summary” for an effective prospectus of an IPO:
a) Term of Funds
b) Number of Units Offered
c) Persons Eligibility to Apply for The Offer
d) Offer Opening Date
e) Offer Closing Date
f) Category I Investors
g) Category II Investors
h) Investment Objectives

Answer 1

A) Term of funds-this refers to the time period during which the money which is applied for, will be kept by the company before issuance of this share and allotment of this year. Most IPO funding are of short-term nature.

These can also be referred to the terms and conditions of the issuance of initial public offer.

B) Number of units offered-it is the total number of shares which have been offered for subscription.

C) Persons eligibility to apply for the offer-this explains the eligibility criteria of different persons who can apply for the initial public offer of the company. It may relates to the nationality or particular categories.

D) Offer opening date-this explains when the offer will open for subscription.

E) Offer closing date-this explains when the offer of IPO will close and last date before which one can apply for this IPO

F) category I investor-these refers to certain category of investors like qualified institutional investors and commercial banks along with public financial institution and mutual fund houses with foreign portfolio investors.these categories of investors often bid in large quantities.

G) category II investors-these are non institutional investors and all other applicants who can apply for less than 2 lacs in India in an initial public offer.

H). Investment objectives-this refers to the objective for which the fund is to be raised by the company and where the objective of the company lies, for allocation of the funds.