Purpose of the FAQ Page
The FAQ page aims to provide answers to common questions about IPOGMP.IN. in addition, the FAQ covers how to use the platform, understand IPOs and GMP, and navigate various features and services.
What is IPO?
IPO is an Initial Public Offering is when a private company goes public through a public offering of securities. Companies send out a draft letter, also known as a draft red herring prospectus ( DRHP) to the Securities and Exchange Board of India (SEBI) after approval. The Company will submit a Red Herring Prospectus (RHP) and final documents. Including the IPO launch date and required information.
Companies can raise capital through an IPO by issuing new shares to the public. Or existing shareholders can sell their shares to the public without raising new capital. An IPO consists of two parts: issuing new shares and offering them. It serves as a mechanism for companies to list their shares on the main market or stock exchange.
Who decides the Price Band in IPO?
The company sets the price or price range for its IPO with the help of lead managers. (Commercial banker or group member)
In India, SEBI (regulatory body) and stock exchanges do not determine the price of public issues. SEBI only verifies the information in the IPO prospectus.
The company and its lead managers conduct extensive market research and roadshows to determine the appropriate price for the IPO. May risk not being able to attract investors. Often times, if investors don’t like the company or the price offered, They can choose not to apply. This causes the problem of undersubscription. In such a case The company may reduce the offering price or postpone the IPO.
Who sets the date for the issue?
After obtaining approval for the DRHP, the company consults with lead managers and merchant bankers to determine the final IPO dates.
What is the role of the IPO registrar?
The Public Issues Registrar plays a key role in regulating IPO’s. It is an independent financial institution registered with SEBI and the stock exchanges. which is appointed by the company to the public.
The main responsibilities of the Registrar for IPOs include processing IPO applications, allocating shares to applicants as per SEBI guidelines, issuing refunds through ECS or cheques, transferring allotted shares to the investor’s Demat account.
What do Lead Managers do in an IPO?
Lead managers are independent financial institutions appointed by companies that go public. For large IPOs, companies often employ multiple key managers. They are called book manager and book administration manager.
Their main responsibilities include initiating the IPO process, helping companies with roadshows, preparing draft offering documents, seeking approval from the SEBI stock exchange, and helping companies list their shares on the stock exchanges.
What is the Primary & Secondary Market?
The primary market is where investors buy shares directly from issuers to raise capital.
The secondary market is where stocks are traded after their initial public offering (such as an IPO) and are listed on a stock exchange. The secondary market consists of the equity and debt markets. It serves as a platform for trading listed stocks. Basically, Primary markets help companies enter the secondary market.
What is the life cycle of an IPO prospectus?
To go public, the company has filed a draft Red Herring Prospectus (DRHP) with SEBI which is assisted by the Lead Manager. The DRHP contains details about the company, its business, management, risks involved, financials, etc. SEBI reviews the document and recommends further action. Change if necessary After final review, SEBI approves the DRHP, allowing the company to proceed with its IPO. These documents can be accessed on SEBI’s website under Filings > Public Issues > Draft Offer Documents.
Once SEBI clears the DRHP, the document becomes an offer document. It is a revised version of the DRHP. After approval of the offer document by SEBI, the company adds specific details such as issue size, date and price range. This updated document is called the Red Herring Prospectus and can be found on SEBI’s website under Under Filings > Public Issues > Red Herring documents filed with ROC.
What is DRHP?
A Company that wants to go public file a draft Red Herring Prospectus (DRHP) with SEBI with the help of key managers. The DRHP contains information about the company. Including business details, management, and risks related to the problem. Company Finance etc. SEBI reviews the PDF document and comments if required. After the final review, SEBI approves the DRHP and allows the IPO. The document is available on SEBI’s website under Reports > Public Issues: Draft Proposal filed with SEBI.
What is RHP?
After SEBI clears the Offer Document, the company adds details such as issue size, date, and price band to the document. This modified document is called the Red Herring Prospectus. The documents are available on SEBI’s website under Filings > Public Issues > Red Herring Documents filed with ROC.
Do you require a Demat Account to apply for an IPO?
Yes, an investor who wants to apply for an IPO must have a Demat account with either NSDL or CDSL.
Do you need a PAN card to apply for an IPO?
After 2006, SEBI made PAN card mandatory for IPO applicants. If someone applies for IPO without PAN card or without PAN card, it is considered illegal.
How many IPO Applications via one PAN Number?
IPO applicants can apply for one IPO from a single PAN number as per the rules.
How many IPO applications can one bank account submit?
The number of IPO applications from one bank account varies from bank to bank. SBI Bank allows 5 IPO applications with one SBI bank account, while ICICI Bank allows only 1 IPO application.
IPO investors can add 5 different Demat accounts in their SBI bank account and apply to a single bank account.
How many Ways to Apply for an IPO?
One can apply for an IPO via ASBA (Bank), UPI, or Offline Forms.
Is it possible to apply for IPO through BHIM UPI?
SEBI allows UPI Id for IPO application. BHIM app will be one of the best options to apply for IPO through UPI which will ease the IPO application process.
Download the BHIM app and create a UPI ID or link a bank account. When applying for an IPO, provide the UPI ID and you will be authorized by BHIM to approve the mandate and successfully submit the IPO application in a few simple steps.
What is the difference between Book Building and Fixed price?
Initial public offerings can be made using a fixed-price method. How to reserve a book or a combination of both Difference between shares offered through book creation and shares offered through general public issue (Source: BSE)
What is the Difference Between RII, NII, QIB and Anchor Investors?
There are different categories to apply for IPO.
RII – Retail Investors: Under this category Applicants can apply for an offer price of less than Rs 2 lakh. Retail investors can be Indian, NRI or HUF, as per the company’s prospectus. The retail category can be 10% or 35% of the issue size. Can be applied at a cut-off price.
NII- Non-Institutional Investors: Under this category Applicants can apply for bids above Rs 2 lakh. NII investors can be Indians, NRIs, HUFs, corporations, societies or trusts. The level of NII can be 15% of the issue size as per the company’s prospectus.
QIB – Qualified Institutional Investor: QIB investors may be public financial institutions. commercial banks, mutual funds, foreign portfolio managers, etc. As per the company’s prospectus, the QIB category can be between 50% and 75% of the issue size. According to SEBI, QIBs will not be able to withdraw applications. They are not eligible for discount applications.
Anchor Investors: Anchor investors can apply for Rs 10 Crore and above through book creation process. Public offerings offer the opportunity to apply before IPO day to attract investors. They are allocated up to 60% of the QIB category. They are not eligible for discounted applications.
What is Grey Market Premium (GMP)?
GMP refers to the premium amount that an IPO shares trades on the gray market before it is officially listed. Reflects the needs and feelings of investors.
How Reliable is GMP as an Indicator?
Although GMP can indicate market sentiment, But it is not always a reliable predictor of post-IPO performance. It should be used in conjunction with other analyses.
Where Can I Get Information on Recent IPOs?
Recent IPO information is available on IPOGMP.IN under the ‘Upcoming IPO’ section. Specifically, it includes details on listing dates, issue prices, and company backgrounds.
How to Contact IPOGMP.IN Support?
You can contact IPOGMP.IN support through the contact form on our website; alternatively, you can reach us via email or by calling our customer service hotline. Additionally, support details are available on the “Contact Us” page.
What Services Does IPOGMP.IN Offer?
IPOGMP.IN offers a range of services, including IPO news and updates, GMP analysis, market insights, and educational resources for investors.
What Are the Privacy Policies of IPOGMP.IN?
Our privacy policies outline how we collect, use, and protect your personal information. Furthermore, you can read our full privacy policy on the ‘Privacy Policy’ page.
Stay updated with the latest IPO news! Explore our in-depth analyses, GMP updates, and expert insights by visiting other sections of our site like Upcoming IPO and SME IPO.