Kynaa, a beauty products e-commerce company, is diversifying into men’s
grooming. It is also tapping the demand for beauty products in the fashion industry
and amid professionals such as make-up artists. As it diversifies its online
presence, Kynaa is also expanding its physical presence. They have 41 outlets
across 18 cities presently and plan to expand to 180 outlets. Each store requires a
capital expenditure of 60-80 lakh rupees. The company has decided to raise funds
by issuing equity shares but not directly to the public, rather by offering them for
sale through brokers. Identify and briefly explain the method of floatation
followed by the company. Also name & explain the other methods of floatation
that can be used by the company for raising funds from the public, in the primary
Answers
Answer:
Kynaa, a beauty products e-commerce company, is diversifying into men’s
grooming. It is also tapping the demand for beauty products in the fashion industry
and amid professionals such as make-up artists. As it diversifies its online
presence, Kynaa is also expanding its physical presence. They have 41 outlets
across 18 cities presently and plan to expand to 180 outlets. Each store requires a
capital expenditure of 60-80 lakh rupees. The company has decided to raise funds
by issuing equity shares but not directly to the public, rather by offering them for
sale through brokers. Identify and briefly explain the method of floatation
followed by the company. Also name & explain the other methods of floatation
that can be used by the company for raising funds from the public, in the primary
Methods of floatation
Explanation:
Method of floatation used is offer for sale- In this method securities are not offered directly to the public but are offered for sale through intermediaries like stock brokers.
Other methods are include:
1. Offer through prospectus - This method involves inviting subscription from public through prospectus. The issue may be underwritten & has to be listed with one stock exchange.
2. E-IPO - A company proposing to issue capital to the public through online system of stock exchange.