IPOs

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Concepts & FAQ's IPOs

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Why should one invest in an IPO?

An attractively priced IPO gets a good response from investors as the chances of gains on listing are high.
Book building method to fix the price gives investors an opportunity to choose the price they are willing to pay. Book building is a price discovery mechanism in order to fix the price of the IPO. The underwriter specifies the floor cap or the minimum price of the IPO and the cap price or the maximum price. The investors must choose a price within this range called the price band. The most popular price among the investors is called the cut-off price. Shares are allotted to anyone who bids above the cut-off price in the requisite proportions depending on the size of the issue.
The success of an IPO depends heavily on market sentiments. The IPO investments are made for short term gains and investors invest in order to make profits mainly in a bullish market.
Investors in an IPO of a Company buy shares at a fixed price and do not have to pay stamp duty and brokerage fees.
About 50% of the IPO size is allotted to qualified institutional buyers. The IPO also has anchor investors who subscribe for 30% of the quota of the qualified institutional buyers. These anchor investors serve as brand marketers or ambassadors of the IPO. The investor sees names or institutions of high repute and this gives them a measure of confidence to invest in the IPO. They stay invested for a period of 30 days .If the qualified institutional buyers and anchor investors are bullish on the IPO then the price band is higher subject to a certain maximum limit.
According to the new rules every retail investor will get a minimum number of shares subject to availability while the remaining will be allotted in the requisite proportion. According to earlier rules in case of an over subscription the highest bidders were allocated shares and the bidders for lesser amounts got no shares. This discouraged lesser investors from participating in the IPO. This shortfall has been made up.

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IPOs Articles

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Upcoming IPO's of 2018

16 January 2018, Tuesday

The year 2017 was the best year ever for the IPO market. In 2017, Companies had raised Rs 1,61,116 Crores through Initial Public Offerings (IPO). This is the highest amount ever raised in a calendar year. The year 2018 looks even more promising. Want to know more on investment planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial product ....

Factors To Consider Before Investing In An IPO

03 January 2018, Wednesday

The year 2017 was the best year ever for the IPO market. In 2017, Companies had raised Rs 1,61,116 Crores through Initial Public Offerings (IPO). This is the highest amount ever raised in a calendar year. The year 2018 looks even more promising. As IPO's are part of the equity market, they are subject to all risks that equity shares face. So before investing in an IPO, investors should consider the following factors. 1. Go through the prospectus of the Company &n ....

Methods of IPO

18 June 2015, Thursday

A Company is new but has a sound business model. Its products have great demand. Its services are selling like hot cakes. But the Company is facing a financial crunch. It needs more money for expansion. This is when the Company decides to go public. The Company sells its stock to the public for the first time called an IPO. The Company first targets people or institutions with a lot of money. These are called Qualified Institutional Buyers.There are a number of methods of IPO which you ....

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What is investing?

Setting aside your money now to get more money in the future.You earn an income each month. You set aside some amount for your basic needs as savings. You maintain 3-6 months of expenses in your savings bank account for any contingencies and invest the rest.

If you are a conservative investor you will invest in fixed income securities such as fixed deposits. The amount you invest (Principal) is safe and you get interest on this amount. If you are an aggressive investor you invest in equity. You get a higher return at a higher risk. The amount you invest could double in a short time or even be lost. You may get a higher return than fixed income investments but the risks are high.

How to invest?

You can invest fixed amounts of money every month for a fixed period of time in an equity mutual fund. This is a systematic investment plan (SIP). You can calculate returns you get through an SIP using an SIP calculator.

You may have an investment goal where you may need a few lakhs for your child's college education in 5 years time. How much money you need to set aside now to achieve your investment goal can be calculated using the investment goal calculator.

How an online investment calculator works?

You can easily calculate your investment returns with a high degree of accuracy using the online investment calculator.

This online investment calculator has 2 options:

• Calculate your investment returns yearly.
• Calculate your investment returns monthly

How to calculate investment returns yearly using online investment calculator?

Step 1: You have to fill the amount you want to invest each year by adjusting the slider on the scale of the monthly investment in the investment calculator. You can also fill the amount directly.

Step 2: You fill the rate of return you would like to get. If you are a conservative investor you fill 8-9%, and if you are an aggressive investor you fill 11-12% using the slider on the scale of the expected rate of return in the investment calculator. You can also fill the expected rate of return on your investment directly.

Step 3: You have to choose a period in years which you intend to stay invested. You fill this time period using the slider or directly in the total investment period of the online investment calculator.

Step 4: You have to enter any current investments you hold in the current investments slot. The investment calculator will calculate your returns on this amount as per the expected rate of return you have entered earlier.

What does this online investment calculator shows you?

Your investment calculator will give you the future value of your investment. You are also shown the total investment you have made and the total amount your investment has grown to.

Answer 1

An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuer's securities.

It all began with the Dutch East India Company in 1602 and even today the sole objective of an IPO is to maximize value for its stakeholders. When a company lists its securities on a public exchange, the money paid by investors for the newly issued shares goes directly to the company. An IPO, therefore, allows a company to tap a wide pool of investors to provide itself with capital for future growth, repayment of debt or working capital. A company selling common shares is never required to repay the capital to investors.

Answer 2

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Answer 3

Security Exchange Board of India (SEBI) regulates an IPO process

Answer 4

When a company wants to raise funds through initial public offering (IPO) it appoints an investment bank for underwriting the issue. An Investment bank is also called as merchant bank.

Answer 5

The primary role of a merchant banker should be to act as a bridge between the organization and the investors. Firstly, the merchant banker should have a brand image in the market. A merchant banker should have the capability and the experience to handle a large-scale IPO. And they should be able to reach a larger mass of people because investors today are just not located in the metros but also in tier-II and tier-III cities." Simultaneously, they also find out the risk management strategies for the company since risks and ventures are two sides of the same coin. Apart from being a link between the organization and the investors, a banker also has to generate interest and build up the confidence of the investors.

Answer 6

Subscription list for public issues shall be kept open for at least 3 working days and not more than 10 working days.

Answer 7

The guidelines have been provided that the issuer in consultation with Merchant Banker shall decide the price. There is no price formula stipulated by SEBI. SEBI does not play any role in price fixation. The company and merchant banker are however required to give full disclosures of the parameters which they had considered while deciding the issue price.

Answer 8

As per the requirement, all the public issues of size in excess of Rs.10 crores are to be made compulsorily in the Demat account. Thus, if an investor chooses to apply for an issue that is being made in a compulsory Demat mode, he has to have a Demat account and has the responsibility to put the correct DP ID and Client ID details in the bid/application forms.

Answer 9

An Initial Public Offer (IPO) is a means of collecting money from the public by a company for the first time in the market to fund its projects. In return, the company gives the share to the investors in the company.

Answer 10

As per the cyber rules of Government of India, this facility is not provided. Only in case of book building issues, the brokers can bid online on behalf of subscribers.

Answer 11

For a public issue, you can know the status by calling the registrar (you will know about the registrar on the Highlights Page of the issue) after 30 to 40 days from the closing date of the issue. However, in a book building issue, you can know the status by calling the registrar after 20 days from the closing date.

Answer 12

A draft prospectus provides the information on the financials of the company, promoters, background, tentative issue price etc. It is filed by the Lead Managers with the Securities & Exchange Board of India (SEBI) to provide issue details.

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What Is An Initial Public Offering (IPO)?

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Buy Low Sell High

Book Building Method

Concepts & FAQ's IPOs

What is an IPO?

Why is an IPO offered?

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Why should one invest in an IPO?

Who regulates an IPO?

What is a merchant bank?

What is the role of a merchant banker in IPO?

For how many days is the issue open?

Who decides the price of an issue?

Is it compulsory for me to have a Demat account?

What is an IPO?

Can I apply for the IPO online?

Having applied for an IPO how can I know my allotment status?

What is a draft prospectus?

When will the Share certificates / refund orders reach me?

IPOs Articles

Upcoming IPO's of 2018

Factors To Consider Before Investing In An IPO

Methods of IPO

IPOs Videos

Calculator

Investment Calculator

Future value of investments

Total investment made

Your investment has grown to

What is investing?

How to invest?

How an online investment calculator works?

How to calculate investment returns yearly using online investment calculator?

What does this online investment calculator shows you?

Upcoming IPO's of 2018

Factors To Consider Before Investing In An IPO

Methods of IPO

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