Complete Information about IPO Process in India

Friends, today’s topic is IPO PROCESS…

What is the process of bringing IPO? How does a company take out its IPO i.e. public issue?

What are the main terms and conditions that the company has to follow for IPO?

If you also have some such questions related to IPO PROCESS – Initial Public Offering, then keep reading this ARTICLE completely, Because that’s what I’m going to talk to you about today.

How is the IPO process done?

When a company decides to bring IPO to meet its capital requirement, then it has to follow many rules made by SEBI to bring IPO and list the company on the stock market-

In which the first task is to make an appointment as a merchant.

Merchant Bankers knew as BRLM (BOOK RUNNING LEAD MANAGERS) or LM (LEAD managers).

Let us now see, what are the major tasks that a Merchant Banker or BRLM has to do-

Also Check: A Journey From The Formation Of The Company To The IPO

MERCHANT BANKER WORKS

• Merchant Bank makes sure that the company bringing the IPO has followed all the legal rules, and for this also issues the Diligence Certificate to that company,
• A merchant bank also helps the company in making a Draft Red Herring Prospectus (DRHP) and preparing Listing Documents,
• Helps in deciding the registrar, bankers, etc. for the company
• The merchant banker also underwrites the shares of the company, that is, the merchant bank is ready to buy all or part of the shares of the company, which it can sell to the public from Resell.
• In the IPO of the company’s SHARE, the PRICE RANGE / PRICE BAND i.e. HELPS IN DECISIONING THE MINIMUM AND MAXIMUM PRICE OF THE SHARE,
• Along with this, the merchant bank helps in spreading information about the IPO to the people through marketing, promotion, and other activities of the company’s IPO.

Full activity of IPO

1. APPOINTING MERCHANT BANK,
2. Registering for IPO with SEBI,
3. Getting the approval of SEBI,
4. Preparation of Draft Red Herring Prospectus (DRHP),

We also know DHRP by the name of PROSPECTUS, it is the most important document of IPO, in which there is complete information about the following things-

• Full details of IPO
• NUMBER OF ENTIRE SHARES TO BE OFFERED TO PUBLIC
• Why the company wants to issue shares, what is the company going to use the money received from IPO,
• COMPANY’S PROJECT PLAN
• RISK RATIO OF COMPANY’S BUSINESS
• Company’s past financial statements
• Company management information, personal information, and background
• Marketing of IPO – Print Media, Internet Marketing, TV Marketing, and more

5. OPEN IPO FOR PUBLIC – Deciding Date of Issue,
6. OPEN IPO FOR PUBLIC- In this process, which is also called the BOOK BUILDING PROCESS, during this time the company gives time to apply for IPO from the public, which normally can be from 2 to 6 days,

7. PRICE BAND OF IPO – In this process a range of share prices is fixed in IPO-

Like – For fixing the minimum and maximum price per share, and in this fixed PRICE BAND shares are given to the PUBLIC in IPO,

The thing to note is that-

In the PRICE BAND, the price which the PUBLIC thinks is right, can give APPLICATION for that price and QUANTITY,

For example – if the company has fixed the price band of 500-550, then in this case, the orders of maximum PRICE are completed first, and it is left up to the PUBLIC to find the price in the price band fixed by the company. , can apply with that price,

Suppose if the price band of 550 to 550 is fixed, then many people will apply to get shares at Rs.500, while many people will apply for shares at Rs. Applications of any value can be given by the public for that IPO,

8. CLOSURE – After the end of the last day to apply for the IPO, the company has to decide which application to accept and at which PRICE, in the application received from the public.
9. Listing – Lastly comes the day of listing, when that share is listed in the stock market at the price decided by the company BOOK BUILDING PROCESS.

Also Check: How Many Types Of Trading Are There? Types Of Trading

IPO PROCESS- SUMMARY

If we SUMMARIZE our point, then the IPO Process is the PROCESS by which the company brings its IPO,

And after the IPO, the company’s stock becomes available to buy and sell in the secondary market called the stock market.

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