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IPO in India

An Initial Public Offering (IPO) is the very first offering for sale of the stock or shares, by a private company to the general public in the primary capital market. This one of the well-known and popular means of raising expansion capital from public investors, and also become prominent as a stock market listed publicly traded company for the first time, is often used by most of the small and large companies of diverse sectors of commerce and economy, in every country.

In India, IPOs are made through the methods of Fixed Price, Book Building, or the combination of these both. Promulgated as per the Securities Act of 1933, these IPOs are traded openly in the primary capital market for several days, which should fall within the limits of 3 days and a maximum of 21 days. Possessing rich and varied experience in offering services for capital market instruments, management of investment funds, private equity, foreign direct investment, etc., our well-connected service firm provides extensive, gratifying, and secured services for ipo in india, ipo registration in india or abroad, besides giving comprehensive information about diverse ipo requirements, the ipo process, online ipo process, and the IPO process in india.

IPO Major Issues

Every other day, there are available a great many initial public offerings (IPOs) in the primary capital market, by new companies. The older and well-established companies, too, have been offering IPOs to the public from time to time. The following are the two major issues regarding ipo in india:

  • Fixed Price Method - In this method, the prices of securities offered for sale are known in advance to the investors. Demand for the offered securities is estimated later, after the closure of bidding. Payment is to be made in full at the time of application submission. There are some provisions for reservation of shares.
  • Book Building Method - This method was introduced in the year 1999, and rules governing this are described in the Chapter XI of the SEBI Guidelines 2000. In this book building method, only 20% price band is discovered to the investors, the final price being decided after the closure of bidding. The demand for the securities at diverse prices is above board to all during bidding. QIBs are required to make only 10% payment in advance, along with the filled-in up application form; while the other categories of investors are to make 100% payment in advance. In this method, 50% of the offered shares are kept reserved for the QIBs, 35% for small investors, and the remaining for other types of investors.

IPO Process in India

Launching an IPO is a responsible and scrupulous process. This IPO process in india begins with hiring Investment Bank or Banks for acting as the Lead Manager in selling the equity shares of the issuer company. The Lead Manager helps the issuer company in making the IPO Filing to the SEBI (Securities and Exchange Board of India) for approval. Most of the companies also hire a competent and accredited Credit Rating Agency for performing IPO Grading of the Issuer Company, and approvals from the Stock Exchanges (BSE and NSE) for listing of its equity shares.

After SEBI and Stock Exchange approvals, distribution of IPO Application Forms is properly made. After the closure of the bidding, the company decides the Issue Price of the book building IPO shares based on the demand, with help from the Lead Manager and the IPO Registrar. Then, the Basis of Allotment document is prepared.