IPO - Initial Public Offerings

The procedure requires extensive research, advertising, and regulatory compliance. The dynamic nature of the market is reflected in the constant updates and revisions to the upcoming IPO list. The public buying the newly issued shares comprises both retail and institutional investors, while those selling include the company's promoters and early investors. Financial experts are optimistic about the potential growth prospects that the upcoming IPOs in India could bring to both domestic and international investors.

What are Upcoming IPOs?

Upcoming IPOs are those of companies that have filed the DRHP or Draft Red Herring Prospectus and plan to begin trading in the next weeks or months.

It is critical to remain up to date with the latest IPOs in the stock market because:

• You may then appropriately design your IPO investing strategy based on your company research and market attitude towards IPOs. As a result, you will be able to make a better judgement regarding your IPO investment.
• Even if you do not buy in an IPO immediately, you may monitor the success of prospective IPOs. Tracking IPO performance can help you understand market attitude towards IPOs and their industries in general. It will improve your overall grasp of the capital markets and help you timing your investments.

Who can invest in an IPO?

The unveiling of the new upcoming IPOs is expected to bring fresh perspectives and investment opportunities. The Securities and Exchange Board of India (SEBI) enables four types of investors to bid for shares during an IPO process:

• Qualified Institutional Investors (QIIs): QIIs are commercial banks, public institutions, mutual funds, and overseas portfolio investors who have registered with SEBI. The SEBI regulations compel institutional investors to sign a contract that binds them into the IPO for 90 days. This is done to maintain volatility at a minimum during the IPO process.
• Anchor investors: Anchor investors are QIIs with assets worth more than ₹10 crores while applying for an IPO. They can buy up to 60% of the shares earmarked for QIIs.
• Retail investors: Retail investors can invest up to ₹2 lakhs for each new IPO. A quota requires companies to set aside at least 35% of their offerings for retail investors. SEBI has also ordered that if the offer is oversubscribed, all retail investors will be granted at least one lot of shares. If it is impracticable to distribute one lot per investor, the IPO shares will be allocated to the general public using a lottery mechanism.
• High-net-worth individuals (HNIs) and non-institutional investors (NIIs): Investing between ₹2 lakhs and ₹5 lakhs in an IPO immediately qualifies the investor as an HNI. Conversely, non-institutional investors.

How to enhance the chances of Upcoming IPO Allotment

You can take the following actions to boost your chances of allocation -

• Apply with numerous Demat accounts.
• If there is a price range, consider bidding at the higher end.
• Make sure you apply on time, before 4 p.m. on the final day.
• If the firm going public has a parent company, you can invest in that company and then apply under the 'Shareholder' category. Then your chances of allocation will improve.

Prerequisites for applying for an Upcoming IPO  

• Any Indian person with a PAN card can set up a Demat account and apply for an IPO in India. While a trading account is not required to apply for an IPO, you may need to liquidate your holdings if the IPO is credited to your account.
• Aside from eligibility, you must also investigate the firm you want to invest in. While the preceding year has been a good year for IPOs, some firms have performed poorly. As a result, comprehensive research is required before investing in an IPO.
• UPI is a payment option Fill in the bid data in the application form and process with your UPI ID. If you do not have a UPI ID, get one. Here is a list of banks that accept UPI. You can use your UPI ID to apply with three alternatives; read here to learn about the New Process for applying for an IPO using a UPI ID.
• A Bank Account - ASBA (Application Supported by Blocked Amount) is another way to apply for an IPO. However, you cannot apply for an IPO if your account does not have enough funds.