An Initial Public Offering (IPO) is the process through which a private company offers its shares to the public for the first time and becomes a publicly listed company. It helps businesses raise capital for growth and expansion. IPOs also give investors an opportunity to participate in a company's growth journey, while an IPO dashboard helps track important details such as price band, subscription status, allotment updates, and listing information in one place.
How Does an IPO Work?
The IPO process follows a structured path before a company's shares become available for public investment.
- Company Decides to Go Public: A private company plans to raise funds from public investors to support business growth and future expansion.
- Appointment of Intermediaries: The company appoints investment bankers, registrars, legal advisors, and other professionals to manage the IPO investment process smoothly.
- Preparation of Offer Documents: Detailed information about the company, its financials, risks, and objectives is prepared and submitted to the regulator.
- Regulatory Review and Approval: The relevant authorities review the documents before allowing the company to launch the public issue.
- Price Band Announcement: The company announces the price range within which investors can place their bids.
- IPO Subscription Period Opens: Investors apply for shares during the subscription window through eligible platforms.
- Share Allotment Process: Shares are allotted based on investor demand and applicable allocation rules.
- Listing on the Stock Exchange: Once allotted, the shares are listed and become available for trading on stock exchanges.
Types of IPOs
Companies may choose different IPO structures based on their fundraising objectives. Here are the main types of IPOs:
- Fixed Price IPOThe company sets a fixed price for its shares before the issue opens.Investors know the exact share price while applying.Demand becomes clear after the subscription period ends.The process is straightforward and easy to understand for many investors.
- Book Building IPOA price band with lower and upper limits is announced.Investors place bids within the specified range.Demand is assessed during the subscription period.The final issue price is determined based on bids received.This method is widely used in the Indian IPO market today.
Who is Eligible to Apply for an IPO?
Investors must meet certain requirements before applying for an IPO. Here are the key eligibility conditions:
- Valid PAN Card: A Permanent Account Number (PAN) is mandatory for IPO applications.
- Demat Account: Investors must have an active Demat account to receive allotted shares electronically.
- Bank Account Linked with ASBA: The application amount remains blocked in the bank account until the allotment process is completed.
- Residential Status Compliance: Resident Indians, Non-Resident Indians (NRIs), and certain eligible investor categories can apply based on applicable regulations.
- Correct Investor Category Selection: Applicants should apply under the appropriate category, such as Retail Individual Investor (RII), High Net-Worth Individual (HNI), Employee, or Qualified Institutional Buyer (QIB), wherever applicable.
- Accurate Application Details: PAN, Demat account information, and bank details should match to avoid application rejection.
Keep in mind that eligibility requirements may vary slightly depending on the IPO structure and investor category.
How to Apply for an IPO Online from InCred Money?
Applying for an IPO through InCred Money is designed to be simple and convenient. Follow these steps:
- Step 1: Log in to your InCred Money accountSign in using your registered credentials and access the IPO section available on the platform.
- Step 2: Explore available IPOsBrowse upcoming and ongoing IPOs. Review important details such as company information, issue dates, price band, lot size, and subscription status.
- Step 3: Select the IPOChoose the IPO you wish to apply for based on your investment objectives and research.
- Step 4: Enter bid detailsSelect the number of lots and enter your preferred bid price within the available price band.
- Step 5: Verify application detailsCheck your PAN, Demat account information, and application details before submission.
- Step 6: Approve the mandateComplete the UPI mandate or ASBA authorisation process to block the required amount in your bank account.
- Step 7: Track application statusOnce submitted, you can monitor allotment updates, listing details, and application status directly through the platform.
What is the IPO Timeline?
Understanding the IPO timeline helps investors track each stage of the public issue process.
- IPO Announcement: The company announces its plan to launch an IPO and shares key issue details.
- Issue Opening Date: The subscription window opens for eligible investors to submit applications.
- Issue Closing Date: Applications are accepted until the closing date specified in the offer document.
- Basis of Allotment: The registrar finalises share allocation after evaluating subscription demand.
- Refunds or Fund Unblocking: For unsuccessful applicants, blocked funds are released according to the applicable process.
- Credit of Shares to Demat Account: Successful applicants receive allotted shares in their Demat accounts.
- Listing Date: The shares become available for trading on recognised stock exchanges.
- Post-listing Trading: Investors can choose to hold or sell shares based on their investment strategy and market conditions.
While timelines may vary slightly across issues, this sequence is generally followed for most IPOs in India.
