What is IPO? How to issue IPO? How does an IPO work?
In this article you are going to know complete information about how a company issues its IPO and how it works in the stock market. Any company has to issue its IPO before entering the stock market, only after issuing IPU, that company is ready to buy and sell shares for the public.
If you also want to launch your company in the stock market, then the information given in this article is going to prove to be better for you, so let’s know what is IPO and how it works and how we issue our company’s IPO. Even if you do not have a company, it is very important to keep information about IPO because any new company comes in the market only through IPO, so that you can be alert in buying and selling shares of the new company.
Types of IPOs
There are two types of IPO-
1. Fixed Price IPO
If investors want to participate in this IPO, then they have to ensure that they pay the full price of the share at the time of applying.
2. Book Building IPO
In this, the company issuing the IPO provides a 20% price band to the investors. Interested investors place bids before the final price is determined. The lowest price is known as the floor price and the highest price is known as the K price, the final price in relation to the final price of the lions is determined by the investors’ bid.
IPO issuance process
Following are the steps to issue an IPO
1. Selecting an Investment Bank
When a company issues its IPO, investment has to be appointed before it. The investment bank acts as an intermediary in the stock market in the listing process. He prepares the financial statements of the investment bank and assumes all responsibilities and prepares the prospectus for potential investors
2. Preparation of DRHP for SEBI Approval
The investment bank and company prepare the registration statement and DRHP (Draft Red Herring Prospectus) to be submitted to SEBI. DRHP contains all the information about the business except the share price. CB verifies the facts shared by the company and checks for errors, if any, reaches for changes, issues the changes and submits them back Approves all draft prospects after all changes are made in the application Is.
3. In this phase the company
announces the shares to be invested to the public. The executive and underwriters of the company conducts multimedia presentations to share the details of the IPO and the company’s executives and underwriters to assist the roadshow in convincing investors about the company’s potential. can do.
4. Application for Stock Exchange
After getting the approval of SEBI, the company prepares by filing an updated prospect called RHP, although the price of the IPO is not included in the RSP.
5. Determination of Share Price
Determining the lion’s price is one of the main stages of the IPO which is done a few days before the company listing. Companies can choose any one of the following methods while determining the share price .
1. Fixed Price – The companies which offer a fixed price of the share are mentioned in the draft prospectus and final prospectus which has been exercised by
2. At Uncertain Price – When the company does not want to offer shares at a fixed price, it is mentioned in the RHP as a price band which contains the details of the issuing company excluding the effective date and offer price
6. Public Procurement
After the company chooses the type of IPO, the IPO is issued and the shares are ready for the public. When interested investors apply for shares, the company can allot them accordingly.
Hope you have understood the article very well as well as the given information will be very useful for you because this information has been presented in a simple way which will be easy to understand and you can use the given information in your business. . Or it will be useful for general information also.