INITIAL PUBLIC OFFERING
- WHAT IS INITIAL PUBLIC OFFERING?
- DO LISTED COMPANIES NOT ISSUE IPO?
- SHARE ISSUE PRICE
- YOUR IPO PERFORMANCE
- RESEARCH ADVISE
- HOW TO APPLY FOR IPO?
- PAYMENT SYSTEM
- ALLOTMENT IN IPO
- JUST FOR INFORMATION
WHAT IS INITIAL PUBLIC OFFERING?
Initial Public offering is the issuance of shares by a company for the first time. It is like Mukesh Ambani or Tata or Birla inviting you to be a partner in their business. A promoter invites partners through IPO to invest in the company that the promoter is starting. It is not possible to have a one to one partnership with each individual; therefore, Companies Act provides the concept of share capital wherein you can make every individual your partner with as low as one share. The share capital is also called equity capital. The promoter invites individuals to subscribe to the share capital one a one-time basis. This is called the Initial Public Offering or IPO. All investors new to the market are advised to start their investments in equity market through this route
Do listed companies not issue IPO?
Existing companies which are already listed issue public offering, these are called Rights Issue. This issue is made to the existing shareholders of the company. If fresh shares are issued by company it is gives right to every share holder to apply. Sometimes the promoters also offer their shares to the public. This money goes to the promoter and not the company. This is called Offer for Sale (OFS). Public sector enterprises normally use this route for disinvestment. Discounts are given to retail investors. Check on OFS section for more details
IPO pricing is normally very high; hence it is necessary to be careful while subscribing. Bad issue can lead to a loss.
IPO are listed on the stock exchanges, hence selling is not a problem on date of listing
IPO are like lottery. If the issue is good, you may get a premium on listing or if the issue is bad it may open lower than issue price on listing. The price may go further down with time.
Your IPO Performance
You can track your IPO investment performance
ACMIIL provides Research advise on which IPOs are good for applying please subscribe to our Research for advice on IPO listings
IPO has to be applied for through a UPI gateway
Allotment in IPO
Some companies are popular, hence there is lot of demand for IPO. Hence you may not get full allotment. Bank will debit your account only to the extent of allotment made to you. On allotment shares are directly credit to your Depository account. Hence be careful in giving your Demat account number, your application can be rejected in case of any error
Just for information
The objective for investing in IPO should be clear. Are you investing in IPO or the company? If investing in IPO alone then sell off your allotment whatever the price. If you are investing in company buy after listing, since bad companies open at loss and good companies you get such few shares as allotment that it is not worth holding small quantity.