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An Exploration into the Levels of Financial Under Pricing and Indian IPO’s in the UK Equity Market with Focus on the London Stock Exchange (2012)

Ref: fin0030

It is said that International Business has two parts: International trade and International Capital. International capital (or international finance) studies the flow of capital across international financial markets; International capital plays a crucial role in an open economy. In this era of liberalisation and globalisation, the flows of international capital (including intellectual capital) are enormous and diverse across countries. Finance gained more mobility as factors of production especially through the multinational corporations (MNCs). Foreign investments are increasingly significant even for the emerging economies like India. This is in-keeping with the trend of international economic integration. As Peter Drucker rightly says, "Increasingly world investment rather than world trade will be driving the international economy". Therefore, a study of international capital movements is much rewarding both theoretically and practically. Firms primarily rise their money, by corporate bonds, bank based debts and in equity markets. This dissertation project will primarily focus on the equity capital raising in UK markets which is followed by analysis of methodology in under-pricing during in raising the liquidity for above mentioned market. And in the conclusion, it will specify which whether London is an good platform for raising capital for Indian companies. Consequently, the purpose of this project is to explore the drivers and some outcomes of mode raising capital in International financial markets. To achieve this, the study will be guided by the following research questions: (1) An overseas listed companies tend have more under-pricing due to uncertainty and higher information asymmetry. If so, does the Indian IPO’s are under-priced more than others in UK equity market (2) To study the extent of under-pricing in Short run and Long run of Indian IPO’s in UK and (3) What are the factors affecting the Indian IPO price performance.
  • 20,000 words - 82 pages in length
  • Excellent use of literature
  • Well written throughout
  • Good in depth analysis
  • Ideal for finance and international business students


1: Introduction
Dissertation Rationale
Importance of studying Indian IPO’s listed in London equity market (London Stock Exchange)
Outline of the Research
Research Objective and Research Question
Research Objective
Research Questions
Summary of the Chapters and Plan of the study
Plan of the Study

2: An Overview of Indian and UK Equity markets
Importance of stock exchanges in India
Problems in Indian Equity Market
Price Premium (Under-pricing)
Existence of Grey markets
UK as preferable choice for Indian companies for International capital raising
London-Financial Capital of the World
Equity Market in London
Cost of Capital raising
Greater Analyst Coverage and Higher valuation
Valuation Arbitrage
Foreign capital for global expansion
Under-Pricing

3: Literature Review
Literature review on capital raising and under-pricing
Winner’s curse Model
Benveniste-Spindt Model Principle Hypothesis Model
Principle Agent Model

Chapter4: Methodology Outline
Data Collection and Methodology
Data Collection
These data collection methods include prices of those companies, which satisfy the following criteria
Hypothesis
Methodology
Analysis of Indian IPO’s under-pricing for initial trading day
Comparative analysis of Indian and Non-Indian IPO’s
For short run and long run analysis the following formulas will be used
Long-Run Analysis
Factors affecting IPO initial price performance
Age of the company and Initial returns
Offering Size or amounts of funds raised (SIZE) and under-pricing
List Lead time and Initial price performance
Post Issue promoter holding ( PIPH)

5: Summary and Conclusion
Summary and conclusion
Scope for Further Research

References

Appendix Section



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