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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Any Banker or Investor who did before this explain me the following things

Any Banker or Investor who did before this explain me the following things

Go down  Message [Page 1 of 1]

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
Today when i chatting with the friend he told if i deposit 30% of the required amount then i can obtained the Bank Guarantee i wanted, for example if i wanted 10,000,000/= then i have to deposit with them Rs.3,000,000/= And there charges vary depend on the amount involved.

Now say i obtained this 10,000,000 and i applied for 400,000 shares of Union Bank, I want to know the following

If the B.O.D allocate only 25% to me i.e, 100,000 shares then whether i have to apply fresh guarantee by cancelling the previous one?
If not whether the company Company ( IPO Company ) will do the needful with the bank?
Also the refund for the 300,000 shares i.e Rs. 7,500,000/= will be forwarded to me or the refund case will not arise at all because the bank finally going to pay only 2,500,000/= to the IPO Company?
If i applied through whether i need to fill the refund disposal area in the IPO Application?
The 100,000 shares allocated to me will be given to me in my name or in the name of the bank which issued the guarantee? and if it is allocated in the name of the bank how can i dispose the shares?
If it is allocated to me whether the disposal proceeds will be forwarded to me or to the bank?

salt

salt
Vice President - Equity Analytics
Vice President - Equity Analytics
I am sorry that I don't know to answerr your question.

Can you tell us which bank agreed to give you this facility and whether we too can obtain the same?

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
my friend to me is NTB, also i am not sure this is 3% or 30%, he is a customer of the bank and he asked me all the above questions, anyway i also going to check with NTB Tomorrow whether they will give to only customers or to all who are willing to deposit the % required by them

ShareShares


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
I am somewhat related to banking business, I think it will be coming to your CDS account, you will be signing for the IPO application forms, only thing is that the amount requested needs to be within your capacity any thing excess would have to be settled this could be within your margin facility , please verify with your own bank , different banks may be having different conditions ,it is safer with the bank which you have a margin account maintained as there is a problem of credit clearance if you go beyond our capacity. Please verify with your own bank.

venuja


Stock Analytic
Stock Analytic
Gaja,

Its like this.

01. No you don't have to give a new bank guarantee. Because the company take money only to the allocated amount of shares to you.

02.No refund since payment is only to the allocated amount of shares.

03.Better to fill the refund details as well. I think it says if you are applying through a bank guarantee facility u don't have to fill that area.( I,m not sure check with the application)

04.The shares will be allocated in your name & it will be deposited in your CDS A/C

05.Disposal proceeds will come to you.

06.The ratio u are talking depends with the bank. It is 10% or 20% or 30% most probably the value of shares that the company is going to allocate to you will be withing the limit of the cash that u are going to deposit with the bank to obtain the guarantee.(Bank is 100% safe here.)

07. A problem will occur if the company allocate a higher no of shares which the value is higher than the amount u deposit to obtain the guarantee. In this case u have to pay an interest for that amount to the bank until u settled that outstanding with them.

Thanks.

Fresher


Moderator
Moderator
I have some doubts regarding bank guarantee. Appreciate if someone can help me

What is a bank guarantee?

I had an understanding that a bank would give a document of guarantee of some kind that I would be able to pay upto a certain amount, if you have so much deposits with them.
But from the above post, I think I am wrong.

What banks issue guarantees? is it only commercial banks or can it be obtained from NSB too?

salt

salt
Vice President - Equity Analytics
Vice President - Equity Analytics
Guys, this spplys only those who apply LKR 100 million or more. How many of us can/does apply for more than that amount?

You may get a bank guarantee for any amount but in the case of IPO, they accept only application above Rs100 million

KDS

KDS
Senior Equity Analytic
Senior Equity Analytic
I disagree with salt as some companies does allow lower than Rs. 100 million to be applied on BG.

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
thanks for the informations, salt i am not sure what 100 Mn you refer above, but all the IPO's request to furnish the Bank Guarantee in the case ur application exceeds 100Mn mark

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
We got one for 20 mil. so i'm not sure if u need to put 100 mil

anu

anu
Manager - Equity Analytics
Manager - Equity Analytics
Gaja

1. If the bank issues a guarantee for 10Mn keeping a deposit of 3Mn, then it is a cedit decision by them to take a risk for 7Mn on you.

2. At the IPO, the company will not claim on the guarantee. For eg. if you are allotted shares worth of 5Mn. , they will inform you to settle that 5Mn within a stipulated time and take the original guarantee back. You cannot touch the 3Mn with the bank. You will submit a cheque or pay order for 5Mn. and on its realisation, the original guarantee will be returned to you. Then you will return that to the bank and release your 3Mn. kept as security for your guarantee.

3. If you fail to settle the 5Mn. to the IPO company, then only they will claim from the bank on the guarantee. Then the bank will send their pay order for 5Mn. to the co. and start running behind you to claim the balance 2Mn. plus other charges / interest.

So this guarantee business is ideal for high networth persons and companies.

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
[quote="venuja"]Gaja,

Its like this.

01. No you don't have to give a new bank guarantee. Because the company take money only to the allocated amount of shares to you.

thanks as per my example if they allocated to me 100,000 shares, do i need to pay 2,500,000 to the union bank? OR will the Union Bank collect the Rs. 2,500,000/= from Guarantee Issuing Bank?

anu

anu
Manager - Equity Analytics
Manager - Equity Analytics
UB will ask you to settle 2.5Mn within a particular time. If you do not settle, then they will claim 2.5Mn. from the G'tee issuing bank.
(If anyone out there has any different opinion, pl express)

salt

salt
Vice President - Equity Analytics
Vice President - Equity Analytics
@mono wrote:We got one for 20 mil. so i'm not sure if u need to put 100 mil

Does IPO company accept application with less than LKR 100 million accompanied with a bank guarnatee? To my knowledge is "NO"

NO sir, you are right!

Payment should be made separately in respect of each Application by way of a cheque or bank draft or bank guarantee. Each Application Form should be accompanied by only one cheque or bank draft or bank
guarantee and should be issued for the full amount indicated in the Application Form. An Application accompanied by two or more cheques or bank drafts or bank guarantees will be rejected. Cash will not be
accepted. Anyone wishing to pay cash should obtain a bank draft from any licensed commercial bank in Sri Lanka. Cheques or bank drafts should be drawn on any licensed commercial bank in Sri Lanka and crossed
“Account Payee Only” and made payable to “Union Bank of Colombo Limited – Initial Public Offering”. The bank guarantee should be issued by any licensed commercial bank in Sri Lanka and in favour of “Union Bank of Colombo Limited – Initial Public Offering” in a manner acceptable to the Bank and be payable on demand. Payment for Applications for values below Rupees One Hundred Million (Rs. 100,000,000/-) could be supported by a cheque or bank draft or bank guarantee. Payment for Applications above and inclusive of Rupees One Hundred Million (Rs. 100,000,000/-) should only be accompanied by a bank guarantee. Investors residing in outstation areas from which cheque clearance may take over two (02) Market Days are advised to make payment via bank drafts to avoid any delays.
Please refer “Section 5.14 – Payment of Application Monies” in the Prospectus for further details

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
they will accept even 1,000 shares you can apply with BG,

Payment for Applications for values below Rupees One Hundred Million
(Rs. 100,000,000/-) could be supported by a cheque or bank draft or bank guarantee. Payment for Applications above and inclusive of Rupees One Hundred Million (Rs. 100,000,000/-) should only be
accompanied by a bank guarantee.

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
Mono do i need to fill the refund cage, if i applied through BG

17Any Banker or Investor who did before this explain me the following things Empty BG Wed Feb 16, 2011 4:55 pm

milanka

milanka
Vice President - Equity Analytics
Vice President - Equity Analytics
@Gaja ,

I am writing after reading the complete thread , the prospectus and the application.

a. You could apply for even 1000 shares with the BG. Its correct.
b.Union bank would ask you directly to pay them for the allocated number of shares first.
c. if you do not pay then thay would collect that amount from your bank.
d. the amount you have to deposit with your bank to get a higher BG amount is between you and your bank. check with them.
e. you do not have to fill in the SLIPS box in the application. In your case there is no refund as you pay only for the allocated number of shares.



Last edited by milanka on Wed Feb 16, 2011 4:56 pm; edited 1 time in total (Reason for editing : typo)

http://forum.srilankaequity.com/u188

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
Thanks Everybody for the valuable comments and time spend to reply this post, here is my personal experience

the bank requested me to keep the 3% margin in my account ( this amount on hold ), and the UB didn't ask anything from me to pay, the my bank release the fund after deducting the value for the shares allocated to me ( UB directly got the money from the Guarantor )

Once again thanks for the information

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