An IPO is an Initial Public Offer made by a company (issuer) offering shares or debentures or other tradable security to the public at large. An IPO is either for a) Fresh issue of capital, where the funds are used for the projects / growth of the company. while a FPO is a Follow- on public offer. here the companies comes with the issue second time or more.
In an IPO price discovery takes place through Book Building process while in an FPO mostly a Fixed price is opted.
Book Built IPO, in which there is a discovery of the price through the price bidding mechanism. Usually, a band (range) of the price is announced, and interested investors apply or bid for the security within this band i.e. the application can be for any price within this range.
The difference between the price band should not be more than 20%
SEBI (Securities' Exchange Board Of India) issues guidlines,which specifies the percentage of the total securities offered for each category of investors from time to time.Currently,in any IPO,the allocation is usually as under:
QIB - 50%
HNI - 15%
Retail - 35%
Following are the entiteis asociated with the IPO
A BRLM is the Book Running Lead Manager,who manages the entire IPO exercise and acts as the guide to the issuer in all maters releting to the public issue. BRLM ensures that all information presented before the investing public is proper.The BRLM advices the company on the price band,the timing of the issue, etc..
A Registrar to an Issue is a SEBI-registered entity,qualified to act as such,and who processes all the application forms and carries out the allotment process,as per the rules/prospectus.The Registrar is responsible for complying with the time deadlines of updating the electronic credit of shares to the successful allottees,dispatching/uploading of refunds and attending to all investor related queries after the issue is compleated.
Crediting of Issue shares
The credit of the shares allotted to you,should be completed within fifteen working days after allotment by the Company from the date of closure of the issue.
The share should be listed within 21 days of closing of offer.
In an Fixed Price Issue,the time deadlines are 30 days from the date of closure (insted of 15 days as in Book Built IPOs) for obtaining the approval of Basis of Allotment,credit of the shares and despatch /credit of refund amounts.
Refund of money
The Registrar has to despatch the Refund order and upload the electronic credit/ECS on or before the end of 15th day from the date of closure of the issue.
Points to remember while applying
- Your Demat Account Number is clearly written without any smudging or overwriting etc.
- Your payment details like cheque number,bank details etc.are clearly written.
- Your bid is for the proper bid lot and a price within the bid range.
- The order of names in the application is the same as in your DP account.
- All applications have signed the application form.
- If required you have submitted the PAN copy and PAN details in application form.
Labels: Indian stock market, IPO
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Thanks for your nice article on IPO.
While we apply for IPO, at which rate are we to bid ( for retail category applicants ) .
Should it be at the Floor price / peak / a guess work between the two.
Purushothaman T S
Look for the Analyst views....
If possible apply on last day (that way you can get to know what is the subsription leevel).
Now if it has good subscription apply on peak. If fixed price is below your quote price , you will get your money back
What are the good shares to buy now (or sell)??
Karthik