IPO Basics
What is an Initial Public Offering?
An initial public offering (IPO) is an offering of fresh shares to the public with a view to listing the company in the stock exchanges. The IPO market is also called the primary market and is to seen as distinct from the secondary market.
Why are IPOs conducted?
Essentially IPOs are done for one of the two reasons. Firstly, an IPO is intended to raise fresh capital to finance the expansion / diversification plans of the company. An IPO can also be in the form of an offer for sale where the IPO is done to give an exit route to early investors in the company.
How can I apply for IPO?
You can apply for an IPO either offline or online. An offline application can be made by filling up the IPO form and submitting it physically to the banks / brokers. Alternatively, you can also apply for the IPO through your online trading account interface provided by your broker and it is a lot simpler.
Can I send multiple applications for one IPO?
No, you cannot put multiple applications for an IPO and there can only be one application under one PAN number. If there 5 members in your family then you can put in 5 applications. But duplicate applications in the same PAN is barred and your application is likely to be rejected.
What are categories in which IPO allotment applications can be made?
IPO allotments are typically made under 3 broad categories viz. Retail, Non-Institutional (HNI category) and Qualified Institutional Buyers (QIB). There is a 35% allocation to retail in book built issues and 50% for QIBs. In addition, some IPOs also have a special allocation to employees.
