Chapter 13 – Primary Markets for Equity BA 543 Financial Markets and Institutions.

Slides:



Advertisements
Similar presentations
THE PRIMARY MARKETS.
Advertisements

Chapter 14. Primary Markets
Chapter 6 PRIMARY MARKETS. Regulation of the Issuance of Securities Underwriting activities are regulated by SEC in US.Underwriting activities are regulated.
CHAPTER 19 INVESTMENT BANKING.
Chapter 15 Raising Capital McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 15 Raising Capital. Key Concepts and Skills Understand the venture capital market and its role in financing new businesses Understand how securities.
The Initial Public Offering (IPO) By, Bo Brown. Initial Public Offering (IPO) Definition: A company’s first equity issue made available to the public.
Chapter 9 The Securities Act of 1933 & Underwriting Equity Securities.
Chapter 14 - Raising Capital in the Financial Markets.
Chapter 23 Investment Banks, Security Brokers and Dealers, and Venture Capital Firms.
Copyright © 2012 Pearson Prentice Hall. All rights reserved. CHAPTER 22 Investment Banks, Security Brokers and Dealers, and Venture Capital Firms.
How Securities are Traded
15.0 Chapter 14 Raising Equity Capital Key Concepts and Skills Understand the venture capital market and its role in financing new businesses Understand.
Chapter 23 Investment Banks and Security Brokers and Dealers.
The Stock Market - Primary Market
Securities Firms (ch21) – Fin Securities Firms Investment Banking Business Brokage Service Investment Funds –Mutual Funds –Hedge Funds.
Chapter 14 – Raising Capital  Learning Objectives  Describe the life cycle of a business  Explain funding process and relationship of angels and venture.
Chapter McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 16 Raising Capital.
Investment Banks Economics 71a Spring 2007 Mayo, Chapter 2 Lecture notes 2.2.
FIN437 Vicentiu Covrig 1 Raising equity capital (see chapter 23 in Berk and Demarzo “ The Mechanics of Raising Equity Capital”) “ The Mechanics of Raising.
Security Markets Objectives Primary market Secondary Market.
 The McGraw-Hill Companies, Inc., 1999 INVESTMENTS Fourth Edition Bodie Kane Marcus 3-1 Irwin/McGraw-Hill How Securities are Traded Chapter 3.
Financing Process 11/03/05.
Capital Markets. Financial market that facilitate a flow of long-term funds. Capital markets are the markets where securities such as shares and bonds.
1 Chapter 18 Issuing Capital and the Investment Banking Process McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Small Business Finance…
Initial Public Offering
McGraw-Hill/Irwin ©2001 The McGraw-Hill Companies All Rights Reserved 15.0 Chapter 15 Raising Capital.
PRIMARY MARKETS AND THE UNDERWRITING OF SECURITIES
Securities Operations
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 0 Chapter 15 Raising Capital.
INVESTMENTS Lecture 2 Security Markets. Security market organization §Markets are meant to allow buyers and sellers to interact. §Good financial markets.
Chapter 15 Raising Capital McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Ch Rising Capital in The Financial Markets  2002, Prentice Hall, Inc.
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Raising Capital Chapter 15.
Venture Capital Private financing for relatively new businesses in exchange for stock Usually entails some hands-on guidance The company should have an.
Copyright © 2014 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
V. STOCKS. “Bulls Make Money, Bears Make Money, but Pigs Get Slaughtered” – Wall Street SayingWall Street Saying.
McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Securities Markets CHAPTER 3.
McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 3 How Securities Are Traded.
Finance 300 Financial Markets Lecture 5 Fall, 2001© Professor J. Petry
Chapter 3 (BKM)1 How Securities Are Traded Chapter 3 (BKM) Finance 650 Spring 1999 Lecture notes prepared by: Dr. Susan D. Jordan.
Chapter 3 How Securities are Traded.
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Raising Capital Chapter Fifteen Prepared by Anne Inglis, Ryerson University.
Chapter 2: The Internet 1 Raising Capital New businesses  Five year success rate  Banks  Sources of funding Structure? Security law violations?
RAISING CAPITAL Chapter 15.  Definition of capital: borrowed sums or equity with which the firm's assets are acquired and its operations are funded.
CHAPTER 19 INVESTMENT BANKING. Copyright© 2003 John Wiley and Sons, Inc. Investment Banking Investment Banks (IB) are the most important participant in.
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-1 How Securities Are Traded Chapter 3.
15- 1 McGraw Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved Fundamentals of Corporate Finance Sixth Edition Richard.
1. 2 Learning Outcomes Chapter 3 Describe the role that financial markets play in improving the standard of living in an economy. Describe how various.
19-1 Chapter 19 The Capital Market © 2001 Prentice-Hall, Inc. Fundamentals of Financial Management, 11/e Created by: Gregory A. Kuhlemeyer, Ph.D. Carroll.
13-1 Agenda for 5 August (Chapter 15) Raising Capital Early-Stage Financing and Venture Capital Selling Securities to the Public Underwriters Alternative.
Copyright © 2003 South-Western/Thomson Learning All rights reserved. Chapter 2 The Creation of Financial Assets.
FINANCE IN A CANADIAN SETTING Sixth Canadian Edition Lusztig, Cleary, Schwab.
Securities Markets Chapter 3 Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.
The Creation of Financial Assets
How Corporations Issue Securities Financial Institutions Student Presentations Venture Capital Initial Public Offering Other New Issue Procedures Subsequent.
Investments, 8 th edition Bodie, Kane and Marcus Slides by Susan Hine McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights.
IPOs.
Chapter 15 Raising Capital McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Securities Firms (II) (ch21) – Fin Securities Firms (II): Other Businesses Investment Banking Business Brokage Service.
0 Raising Capital The Financing Life Cycle of a Firm: Early-Stage Financing and Venture Capital Selling Securities to the Public: The Basic Procedure Alternative.
CHAPTER 3 Investments How Securities Are Traded Slides by Richard D. Johnson Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin.
Securities Markets. Two Types Primary Market: where first-hand securities are traded or a market of new issuance of securities. Secondary Market: Where.
How Corporations Issue Securities
HARVESTING THE BUSINESS VENTURE INVESTMENT
Business Finance (MGT 232)
Securities Markets CHAPTER 3.
Objectives Primary market Secondary Market
Presentation transcript:

Chapter 13 – Primary Markets for Equity BA 543 Financial Markets and Institutions

Chapter 13 – Primary Markets Primary Markets Newly Issued Securities Typically Bonds and Stocks Also, Commercial Paper, Repurchase Agreements (Repos), etc. Distributed Through Investment Bankers Now Commercial Banks are allowed to participate Syndicates formed for marketing IPOs Initial Public Offerings

Chapter 13 – Primary Markets Traditional Process Underwriting (Investment Bankers) Investment Banker and Firm are Partners in the Issue Investment Banker selected by either  Negotiated - Solicitation of a firm (best in the field)  Bids by Investment Bankers – Select a firm Investment Banker either  Buys the entire deal (firm commitment) or  Provides Marketing Service with Commission on the Sale of the IPO (best efforts) SYNDICATE – Lead Bankers and Others

Chapter 13 – Primary Markets Regulation in the IPO Process Registration Statement with SEC Part One: Prospectus Part Two: Supplemental Information Letter of Comments Due Diligence The role of the underwriter in verifying  Accuracy of Information  No Material Omissions Waiting Period (Cooling Off Period) Preliminary Prospectus – Red Herring

Chapter 13 – Primary Markets Variations in the Traditional Process Traditional Auction – Prorated to last filled price Bought Deal Credit Suisse First Boston and GMAC issue Short Window from Investment Banker Issue bought before markets are lined up for the sale of the bonds or stock Private Placement In State, Less than $1 million, no Public Offering SEC Regulation D – Exemption from Registration

Chapter 13 – Primary Markets Private Placement Restrictions ONLY SOPHISTICATED BUYERS ALLOWED Millionaires (excluding house and car) or Income of $200,000 (single) or $300,000 (couple) annually Restrictions on Re-Sale of Stock Must hold for two years Rule 144A By-pass waiting for re-sale Between Large Institutions Makes Issue more liquid and thus sells better

Chapter 13 – Primary Markets Pre-Emptive Rights Offering to Current Shareholders Allows owners to maintain current percentage of ownership in the company Subscription price is below current market value of the existing shares Uncommon in U.S. but common in other countries Standby Agreement  If not fully subscribed by the current shareholders  Investment Banker will sell remaining shares

Feedback: Privacy Policy Feedback
Do Not Sell My Personal Information
About project: SlidePlayer Terms of Service

© 2025 SlidePlayer.com. Inc. All rights reserved.