• PGP in New Age Banking
    4.8 out of 5 by 669 learners
    4x Industry Demand
  • POST GRADUATE DIPLOMA IN MANAGEMENT
    Co-created with BIMTECH
    4.8 out of 6071 learners
    2x industry demand
  • MBA in Investment Banking
    Co-created with Jain University
    4.5 out of 5 by467 learners
    2x industry demand
  • MBA in Fintech
    Co-created with Jain University
    4.4 out of 5 by 349 learners
    2x industry demand
  • MBA (Distance) in Banking and Finance with NGASCE
    Co-created with NMIMS
    4.7 out of 5 by 669 learners
    4x Industry Demand
  • Post Graduate Program in Banking and Credit Underwriting
    4.7 out of 5 by 1376 learners
    12 X industry demand
  • Post Graduate Program In Finance And Accounting
    Co-created with Grant Thornton
    4.9 out of 5 by 238 learners
    14 X industry demand
  • Professional Certification in FinTech
    Co-created with SP Jain School of Global Management
    4.6 out of 5 by 1421 learners
    6X industry demand
  • Credit Risk and Underwriting Prodegree
    Co-created with Moody’s Analytics
    4.6 out of 5 by 1139 learners
    4X industry demand
  • PGP in Banking and Wealth Management
    4.6 out of 5 by 1429 learners
    3X industry demand

Money-types-650x336When we talk about capital markets, one of the most important feature that I can think of is of ‘Capital Raising’ – after all most of the companies do need capital to invest for their long term prospects. Companies can raise it by issuing two types of instruments – Equities and Bonds, as learned in financial analyst course.
 
The issuance is done via a process called Initial Public Offer. As part of the process, companies need to prepare a document called a Prospectus.
 
A prospectus is a legal document (filed with the regulator of the respective country) that is an invitation to the general public to buy securities from the company. As a document, it contains a lot of information about the company – from the history to its present – including the reason for raising capital. In other words, the main aim for such a document is to help all potential investors in making an informed investment decision on whether they should or shouldn’t invest in the company. Prospectus’ are generally very lengthy as they need to contain all the requisite information (can run into 700+ pages).
 
Some of the main sections of a prospectus include:

  • Product/Services of the company
  • Its financials (assets, liabilities etc.)
  • Goals & business plans
  • Risks that the business faces
  • Competitors of the firm and their impact
  • Other factors in the economy that will impact the firm

 
Business2Golden rules for prospectus preparation

  • Only the true nature of the company businesses should be disclosed
  • Strict and specific accuracy shall be maintained throughout the document
  • In addition to other mandatory disclosures, the company should voluntarily disclose any info that it deems to be
    a fair representation of itself

 
In case there have identified any misstatements during the invitation to the public, the directors of the company, promoters and people authorized in issuing the prospectus will be liable to punishments/penalties and fines (all three if you ‘really’ lucky). There have been many lawsuits that have been brought by the Registrar of companies incase companies have not utilized or mis-utilized any of the proceeds from the IPO .(http://corporatelawreporter.com/2013/02/25/importance-prospectus-tool-investor-protection-india/)
 
There are two main types of prospectuses, as learned in certification courses in finance.

  • The preliminary prospectus is the first offering document provided by a securities issuer. Some lettering on the front cover is printed in red, which results in the use of the nickname “red herring” for this document
  • The final prospectus is printed after the deal has been made effective and can be offered for sale, and supersedes the preliminary prospectus. It contains finalized background information including such details as the exact number of shares/certificates issued and the precise offering price

 
Let’s now look at a recent IPO (Interglobe Aviation Limited) and review a bit of the information provided
images (1)

  • At the start, they have provided the date on which the company was formed (Jan 13, 2004) and the date on which they renamed themselves
  • The IPO will help them raise capital with a value of Rs 1,272.20crs and additional sale of 26,112,000 equity shares by the promoters
  • Refer to the risks of the issue, general risks and the responsibility of the company in the issue
  • The Global book runners and lead managers of the issue (Citi Global Markets, JPM India, Barclays bank, Kotak Bank and UBS)
  • The registrar of the issue is Karvy Computershare Pvt Ltd.
  • Since the capital is being raised for future investments, the company also includes statements such “Forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance”
  • Some of the risks that could derail the company include:
  • How effectively we apply the low-cost air carrier model to the markets in which we operate or plan to
  • Operate and how successful we are in implementing our growth strategy
  • Inability to profitably expand to new routes
  • Inability to continue to negotiate reduced prices in future aircraft purchases
  • Significant amount of debt that we have taken and which we may take in the future to finance the acquisition of aircraft and our expansion plans
  • Availability of fuel and internationally prevailing fuel price including taxes
  • Depreciation of the rupee against the US dollar
  • Event of an emergency, accident or incident involving our aircraft or personnel
  • Inability to obtain regulatory approvals in the future or maintain or renew our existing regulatory approvals

logo
They go into detail and list of 68 risks that can affect a company. If you observe, any of the above statements can easily come true, and have a major impact on the company. But such information has to be provided to the investors. This comes back to a point which I had mentioned earlier – ‘help all potential investors in making an informed investment decisions’
 
The prospectus also refers to all litigation cases (for and against the company).
 
Overall, the role of a prospectus is crucial as it lists both the positives and as well as the negatives that a company can offer to the public. This will therefore provide a clear cut idea to help investors decide if they are willing to invest in the company.

For Online Course Enquiries
About Imarticus
Imarticus Learning is India’s leading professional education institute that offers training in Financial Services, Data Analytics & Technology. We’ve successfully transformed careers of over 35,000+ individuals globally through our Certification, Prodegree, and Post Graduate programs offered in association with leading and renowned global organisations in the Financial Services, Data Analytics & Technology domain.
Related course
  • Placement Program
    PGP in New Age Banking
    Course duration(Months)
    24
    Upcoming batches
    1
    Organizations enrolled
    20
    4.8 out of 5 by 669 learners
    4x Industry Demand
    Upcoming Batches
    Date Location Schedule
    8th Jan 2022 Live Instructor - Led Training Online
    Date Location Schedule
  • Finance
    POST GRADUATE DIPLOMA IN MANAGEMENT
    Co-created with BIMTECH
    Course duration(Months)
    24
    Upcoming batches
    1
    Organizations enrolled
    20
    4.8 out of 6071 learners
    2x industry demand
    Upcoming Batches
    Date Location Schedule
    Live Instructor - Led Training Online
    Date Location Schedule
  • Recent Graduates
    MBA in Investment Banking
    Co-created with Jain University
    Course duration(Months)
    24
    Upcoming batches
    1
    Organizations enrolled
    20
    4.5 out of 5 by467 learners
    2x industry demand
    Upcoming Batches
    Date Location Schedule
    31st July ONLINE Online
    Date Location Schedule
  • Recent Graduates
    MBA in Fintech
    Co-created with Jain University
    Course duration(Months)
    24
    Upcoming batches
    1
    Organizations enrolled
    20
    4.4 out of 5 by 349 learners
    2x industry demand
    Upcoming Batches
    Date Location Schedule
    31st July ONLINE Online
    Date Location Schedule
  • Placement Program
    MBA (Distance) in Banking and Finance with NGASCE
    Co-created with NMIMS
    Course duration(Months)
    24
    Upcoming batches
    1
    Organizations enrolled
    20
    4.7 out of 5 by 669 learners
    4x Industry Demand
    Upcoming Batches
    Date Location Schedule
    8th Jan 2022 Live Instructor - Led Training Online
    Date Location Schedule
  • Post Graduate
    Post Graduate Program in Banking and Credit Underwriting
    Course duration(6)
    Upcoming batches
    1
    Organizations enrolled
    20
    4.7 out of 5 by 1376 learners
    12 X industry demand
    Upcoming Batches
    Date Location Schedule
    Not Available MUMBAI Online
    Date Location Schedule
  • Post Graduate
    Post Graduate Program In Finance And Accounting
    Co-created with Grant Thornton
    Course duration(months)
    4
    Upcoming batches
    1
    Organizations enrolled
    20
    4.9 out of 5 by 238 learners
    14 X industry demand
    Upcoming Batches
    Date Location Schedule
    None DELHI Online
    Date Location Schedule
  • Certification
    Professional Certification in FinTech
    Co-created with SP Jain School of Global Management
    Course duration(Months)
    3
    Upcoming batches
    1
    Organizations enrolled
    20
    4.6 out of 5 by 1421 learners
    6X industry demand
    Upcoming Batches
    Date Location Schedule
    27th November Live Instructor - Led Training Online
    Date Location Schedule
  • PRODEGREE
    Credit Risk and Underwriting Prodegree
    Co-created with Moody’s Analytics
    Course duration(Months)
    3
    Upcoming batches
    2
    Organizations enrolled
    20
    4.6 out of 5 by 1139 learners
    4X industry demand
    Upcoming Batches
    Date Location Schedule
    13th February ONLINE Weekend
    Date Location Schedule
    29th May ONLINE Weekend
  • Post Graduation
    PGP in Banking and Wealth Management
    Course duration(Months)
    2-3
    Upcoming batches
    1
    Organizations enrolled
    20
    4.6 out of 5 by 1429 learners
    3X industry demand
    Upcoming Batches
    Date Location Schedule
    21st October CHENNAI Weekday
    Date Location Schedule