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IPO Process in India steps

Initial Public Offer (IPO).

IPO is coming up with a public offer to raise the capital for the business needs. This is the first time that the company issues shares and goes public.

After the IPO, the promoter holding gets diluted and part of the company is now public.

The IPO is conducted, organized and managed by the registrars of the company like ‘Karvy’.

During IPO process:

A number of times the IPO subscribed is an important factor, the shares are allocated on quota basis that has: Retail, QIP (Qualified Institutional Placements), HNI (High Networth Individuals), Promoters, FII (Foreign Institutional Investors), Employees. A number of times IPO subscribed is the factor of total capital IPO subscribers are ready to pay divided by the capital raised by the company.

The number of shares that you would get upon allotment is nothing but the IPO subscription amount divided by the number of times it was subscribed in that category.

Mostly the least number of subscription will be under the Retail category itself.

numbers of shares: 10 crore
Price of shares: 100 Rupees

Retail Investors: Investment is below 2 lac Rupees.
HNI: Any Indian investment above 2 lac Rupees.
QIP: Private companies
FII: Foreign companies
ESOP: Employees Quota

The general scenario is that the Employees quota get the least subscription.

Real-time Scenario is as such:
Retail Subscription: 10 times
HNI: 15 times
QIP: 20 times
FII: 30 times
Employees: 2 times

IPO is also called as ‘Primary Market’.

Before investing in IPO, the subscription factor is very much important, generally higher the subscription better is the company, better returns can be expected.

In India, IPO process goes on for about three weeks.

Process:

Company Files for the DRHP (Draft Red Herring Prospects) – Meaning it is planning to come up with the IPO within few weeks.

Reference to check which companies are filing IPO: http://www.moneycontrol.com/ipo/

in this go to section: IPO snapshot.

IPO issues open: This is generally the time frame, where the IPO subscription is done, it is between 3 to 5 days, it is only during this period that you have to apply for the IPO, once this time is crossed you will not be able to apply for the IPO again.

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