How To Apply For An IPO in India?

How To Apply For An IPO in India?

How to apply for an IPO in India?

Businesses require money for many reasons. They may need funding to expand their capacity, they may see diversification into new business lines, they may expand their presence in India and abroad or they may also look to repay their high-cost loans. Can.

New Offer vs. Follow-on Offer vs. Offer-for-Sale
The term IPO is actually a generic term that includes a variety of sub-items. The new proposal leads to a listing and expansion of the company's capital base. Then there are follow-on offers in which the company is already listed, but IPO is looking at the market to raise additional funds. Such companies are already listed on the exchanges and IPOs are a means of raising additional funds for their schemes. Most of the disinvestments made by the government are in the form of sale proposals. So, how to invest in an IPO in India and subscribe to an online IPO?

Who is eligible to invest in the IPO?

Remember, in case of an IPO it is not necessary to have a trading account, a Demat account alone is sufficient. However, if you want to sell shares on the listing then a trading account will be required.  An important point to be remembered here! When you apply for an IPO, it is not an offer, but an offer. Only when the IPO issuer offers you shares, it depends on an offer.

How to apply for an IPO

Here you need two important questions: 

How to apply for IPO online and IPO application process. When you apply for an IPO of a company, you need to know

IPOs come in two varieties. Fixed Price IPO and Book Built IPO. In a fixed price IPO, the company already fixes the IPO price as the sum of the par value and premium. In the book built issue, the company will only provide a nominal price range for the IPO and the final price of the IPO will be discovered through the book-making process. Nowadays, most of the IPOs are mainly through the book creation route only.

The IPO consists of three classes. Retail, HNI and Institutional categories. Investments up to Rs.2 lakh in an IPO are classified as retail investors. It is beneficial to invest in retail quotas as the allocation method has been designed by SEBI to ensure that as many retail investors as possible get allocations. Thus, in this case, the probability of your allocation is very high. 

You can bid for an IPO by offline method or through online method. In the offline method, the form is filled in the physical form and the IPO is presented to the banker or your broker. This greatly simplifies the process of filling the online IPO application form. 

In fact, the IPO online application is the preferred mode.

Under the book generated method, the basis of allotment is finalized within 10-12 days and the Demat credit is also within a few days of that. Once the shares are in your Demat account and listed on the stock exchanges, you are free to sell the shares. As previously stated, you need a trading account to sell these shares.

Applying for an IPO is a very important aspect for you to understand. SEBI has now made available a facility called ASBA (Application Supported by Block Supported Amount). 

The advantage of an ASBA IPO is that you do not need to issue a check or pay any money for the IPO until the allocation is issued. The amount up to the limit of your application is allocated from your bank account and on the day of allotment, the amount will be debited only to the extent of allotted shares. 

This means that if you have applied for shares worth 1.50 lakh rupees and you have got allotment for only Rs. 6,000,000, then only 6,000,000 are debited to your account and on the balance, The block is removed from your designated bank account.

The IPO application process has become much simpler in the last 10–15 years. In the process, it has empowered retail investors across India.