- What is an IPO?
IPO (Initial Public Offering) is when a private-owned company issues shares to the public for the first time. IPO allows a company to raise capital by offering shares to the public.
- What are the opening and closing dates?
Investors can apply for IPOs between these two dates.
- What is the Market Lot Size?
While introducing the IPO, a company declares the minimum number of shares that an investor can apply for. This is also known as the “minimum order quantity”.
Let’s suppose, the company declares the lot size as 100 shares. Now, investors can bid for 1 lot (100 shares), 2 lots (200 shares), 3 lot (300 shares), and so on. It means these applications can be made in multiples of 100 only.
- What is the life cycle of an IPO?
- In the first step, the company appoints the investment bank as a lead manager
- The lead managers must prepare a prospectus and submit it to the SEBI.
- SEBI reviews the prospectus and approves it. SEBI returns it to the company if any changes are required.
- The company with the lead managers decides the IPO price and declares the issuing of the IPO date.
- The IPOs are open to bid by the public
- The Registrar processes the IPO applications and prepares the ‘Basis of Allotment’. Transfer shares to the investor’s Demat account. Refund the remaining money through a cheque or ECS.
- Finally, shares of the issuer company are listed on the Stock Exchange.
- What are the primary and secondary markets?
The primary market is where securities are created and sold for the first time to investors.
The secondary market is where securities are traded once issued.
- How long will an IPO be available to the public?
An IPO remains open for at least 3 working days and a maximum of 10 working days.
Fixed Price method
- Difference Between a Fixed Price issue and a Book Building Issue?
With this method, the company declares the fixed price of the share while issuing it to the public. In this case, investors have to pay full payment of the applied shares while submitting the application.
Book Building Issue
In this case, the company doesn’t declare the fixed price but a price range to the investor. The final price of the shares will be disclosed only after the bidding is closed.
- Is a PAN number required in order to apply for an IPO?
Yes, it’s mandatory according to SEBI guidelines.
- What information should I have after submitting the IPO application form?
- Application Number
- Copy of Application Form
- Copy of payment
- Can I cancel my IPO application?
Yes, An investor can cancel it before the IPO issue is closed.
- Where can I get IPO application form?
An investor can download it from the BSE/NSE website or download the ASBA form provided by the advisories.
- How is the listing price determined?
The listing price of an IPO is decided by the market demand and supply of the company shares.