Methods of Marketing Securities
Following are the various methods being adopted by corporate entities for marketing the securities in the New Issue Market:
1. Pure Prospectus Method
2. Offer for Sale Method
3. Private Placement Method
4. Initial public Offers (IPOs) Method
5. Rights Issue Method
6. Bonus Issue Method
7. Book-building Method
8. Stock Option Method and
9. Bought-out Deals Method
Offer for Sale Method
Where the marketing of securities takes place through intermediaries, such as issue houses, stockholders and others, it is a case of Offer for sale Method .
Under this method, the sale of securities takes place in two stages. Accordingly, in the first stage, the issuer company makes an en-block sale of securities to intermediaries such as the issue houses and share brokers of an agreed price. Under the second stage, the securities are re-sold to ultimate investors at a market-related price.
The issue is also underwritten to ensure total subscription of the issue. The biggest advantage of this method is that it saves the issuing company the hassles involved in selling the shares to the public directly through prospectus.