An IPO is defined as an exercise 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. From an investor point of view, IPO gives a chance to buy shares of a company, directly from the company at the price of their choice (In book build IPO's). Many a times there is a big difference between the price at which companies decides for its shares and the price on which investor are willing to buy share and that gives a good listing gain for shares allocated to the investor in IPO.
Follow on public offering (FPO) ispublic issue of sharesfor already listed company, coming up in market with further equity dilution / stake sale.
Primary market is the market where shares are offered to investors by the issuer company to raise their capital.
Secondary market is the market where stocks are traded after they are initially offered to the investor in primary market (IPO's etc.) and get listed to stock exchange/s.
In case of book building issue, shares are offered in a price band and the demand of the share at a particular price can be known everyday during the issue period.
Unlike the book-building route, the price is known in advance to investors in case of offer of shares through normal public issue (Fixed priced issues).
An investor needs to first obtain an IPO application form through a share broker, an investment consultant or from the collecting banks. The investors are required to fill up the form and remit the amount after calculating the number of shares applied for in the bank, which has been designated as a collecting centre for the particular IPO.
To apply in IPO's online an investor has to have a Demat account which provides this facility. There is almost no paperwork involves in applying IPO's online.
Applications Supported by Blocked Amount (ASBA) Process, is the alternative payment method (optional) for IPO application where the IPO bidding amount remains in investors account, but blocked by the bank until allotment is done. The purpose of adding this new payment option is to reduce the turn around time for IPO Stock listing and to make the refund process faster. It's available exclusively for retail individual investors through participatory banks (SCSB's). 6.
Floor price is the minimum price (Lower Tag of price-band) at which bids can be made in book built issue.
Retail individual investor refers to an investor who applies or bids for securities of or for a value of not more than Rs.1,00,000. An individual investor above Rs. 1,00,000 investments comes under HNI / NII quota (Lesser reserved).
Yes, the investor canchange or revise the quantity or pricein the bid using the form for changing/revising the bid that is available along with the application form. However, the entire process of changing of revising the bids shall be completed within the date ofclosure of the issue.
A bidder can request for a transaction registration slip as proof of his/her having entered the bid. Whenever a bid is entered by trading members into the system, a unique transaction registration slip is automatically generated. Transaction registration slip gives details regarding number of shares bid for, price, the client name among other details.
RHP' is a prospectus which does not have details of either price or number of shares being offered or the amount of issue. This means that in case the price is not disclosed, the number of shares and the upper and lower price bands are disclosed. On the other hand, an issuer can state the issue size and the number of shares are determined later.
In the case of book-built issues, it is a process of price discovery and the price cannot be determined until the bidding process is completed. On completion of the bidding process, the details of the final price are included in the offer document. The offer document filed thereafter with ROC is called a prospectus.
Here, the issuer's management gives its view on the Internal and external risks faced by the company. Here, the company also makes a note on the forward-looking statements. This information is disclosed in the initial pages of the document and it is also clearly disclosed in the prospectus. It is generally advised that the investors should go through all the risk factors of the company before making an investment decision.
If an investor sells IPO allocated shares with in 12 month of IPO Allotment, he comes under short-term capital gains and all such gains are taxed.