IPO - Initial Public Offerings

What is IPO?

IPO means Initial Public Offering. It is the process through which private companies go public and offer their share to the public for the first time.

There are many reasons that a company goes public, the major one is to raise capital and expand their business.

How does it work? 

The upcoming IPOs happen when a company achieved the unicorn status because of its potential growth and decided to go public. These companies need to apply for IPOs to SEBI and follow the IPO procedure set by SEBI.

The IPO company needs to declare various technical aspects; those are the fixed price and book building IPO. According to that the company share valuation will take place.

Why IPO?

Companies raise funds from the public market in order to expand their business or release their debt. One of the methods of raising funds is to go public and launch an IPO. Advantage of an IPO for a company is to raise funds without any debt.

Any investor who knows about the company can invest and grab the discount share price of the company. As per the valuation & other technical factors the share price is announced in the market.

Companies can list their shares on stock exchanges such as BSE and NSE in India. You can invest in an upcoming IPO through BlinkX.

Types of IPOs

The IPO announced through two different methods one is the fixed price issue or book building issue.

In fixed price issues, companies along with underwriters evaluate different factors such as company assets, liabilities and other financial aspects. According to the financial evaluation, the fixed price of per share is declared in the market. This price is printed in the order document of the IPOs.

Second one is the book building issue where the price is decided during the process of IPO. It is not a fixed price, here the price band is decided, which is termed the floor price as the lowest price & the cap price which is the highest price. According to the demand of the IPOs, investors get the allotment of the IPO.

Eligibility for Investing in the IPO

Any adult who wishes to invest and has a valid document such as a PAN card and 

Aadhaar card, can easily invest in the IPO.

You can check the new IPOs and open your demat account to make an investment in the following IPOs. It's not compulsory to have a trading account for your IPO investment.

Get started with your IPO investment 

With the opportunity plus the insights from experts, you can invest confidently of your choice.

Potential for High Returns
Investing in IPOs has historically offered greater returns than other conventional investing strategies like equities or bonds.

Diversification at ease
By making investments in newly listed firms, investors might possibly spread their risk and limit losses while diversifying their portfolio.

Liquidity
The tremendous amount of interest in freshly listed shares makes IPO trading extremely liquid, allowing investors to purchase and sell shares accordingly.

Transparency
Companies that go public are required to provide information that is transparent, giving investors a clear view of their financial accounts and other pertinent information.

IPO Terms

Some of the terms that you must be aware of before investing in an IPOs.

IPO open date/ Issue close date: It is termed as the opening and closing date of the IPO bidding process. In the duration of open & close date, investors can apply for the IPO.

Lot size: The lot size of an IPO, refers to the quantity of shares that you need to buy for investing in the IPO.

Exchange: The stock exchange where the IPO is going to be listed after the IPO process. In India, there are two most famous stock exchanges which are the NSE and the BSE.

Issue price: There are two types of issue price which is the book building and the fixed price IPOs. Fix price refers to a specific price of an IPO. And the book building price refers to the price range of an equity, that is ₹320-₹400.

Issue Size: The issue size is referred to as the total monetary value of the IPO. You can get the issue size by multiplying the number of shares offered by the company with the issue price per share of the IPO.