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A Complete Guide for Different Types of IPO

What is the meaning of IPO and IPO stocks?

A primary Public Offering or IPO is the first offering of shares to the public. Before an IPO, the company has a small number of shareholders (founding members and angel investors)

As a retail investor, you cannot buy shares of a company until the firm agrees to sell its shares to the public. To purchase the shares of a firm that is not listed on the stock exchange, you can approach the company owners, but they are not compelled to sell you their stocks.

Launching an IPO is commonly called 'going public,' as public firms give a portion of their shares to be transacted in the stock market to the public.

In short, an IPO signifies the transfer of a company's ownership from private to public. We hope you are cleared with IPO Meaning.

IPO Share Price

There are two types of IPO Share prices in the stock market, Fixed Price Issues and Book Building Issues; we will see the meaning and the difference between them.

Issue of a Fixed Price IPO:

The company specifies a defined price of IPO Stocks at which all of its shares will be issued to the investors. To do this, a corporation hires a merchant banker, an entity that measures and reduces a company's risk level.

A merchant banker determines a company's entire current value as well as its future prospects. Apart from finding, they also do a risk analysis of all investments and determine how the investors will be compensated when exposed to such a high level of risk.

They establish the price of a particular share that should be fixed after analyzing and conducting comprehensive research to raise significant funds for their organization. In this type of IPO, all investors are aware of the price of a specific share set by the firm before it goes public. They pay the entire fixed price when they subscribe to a particular company's IPO.

The Book Building price issue

During the IPO process, the price of the book building issue is announced. The corporation does not set a fixed price in this method, but two pricing bands exist.

The lowest price range is referred to as the "floor price," while the highest price band is referred to as the "cap price." However, investors interested in purchasing the shares must place a bid within a specific time frame before the corporation sets the price.

However, the bidding is done inside the company's 20 percent range or within a price band. In addition, the corporation must specify the number of shares it intends to offer to investors.

How can you find IPO Listing?

Those who are interested to invest in IPO can keep track of upcoming IPOs by visiting the websites of exchanges such as NASDAQ and NYSE and various specialty websites. Some of them are Google News, Yahoo Finance, IPO Monitor, IPO Scoop, Renaissance Capital IPO Center, and Hoovers IPO Calendar.

You can also find the details of New IPO In Market on such websites; depending upon your interest area and returns in the future, you may decide to choose in which IPO you want to invest. Various Fintech companies also update the list of IPOs to be launched on their website; you may also check out there. Different Newspaper companies also share the details of New IPO In the Market daily to make investors aware of them and get them involved.

How To do Online IPO Application

Before applying for Online IPO Application, there are some pre-requisite that you must have; let us have a look at them.

Demat Account- In order to invest in IPOs, you must have a Demat account. This Demat account is where your shares will be kept safe after being allotted.

Trading Account- A trading account is required before applying for an IPO online. Any SEBI-certified Depository Participant can open a trading account for you.

UPI Id- You can use an existing UPI Id associated with your bank account or create a new UPI Id through the BHIM app.

Bank Account- You must have a bank account in order to pay the applied shares. The bid amount for the shares was already debited from the bank account. Based on the number of shares allotted, the remaining cash would be credited later. As a result, SEBI developed ASBA, or Application Supported by Blocked Amounts, to streamline the payment process. A set amount of money is blocked by ASBA based on the number of shares you bid on. Following the allotment, cash is debited from your bank, and if you receive fewer shares than you bid for, the remaining amount is unblocked.

Learn - How to Apply for an IPO Online - Via a Broker

To apply for an IPO through a broker, follow the steps outlined below:

1. Sign in to your broker's online account. If you do not already have an online account, you must register with your email address and phone number to make one.

2. Navigate to the IPO tab and choose the current IPO section. Choose the IPO from the recent list of IPOs.

3. Enter the lot size or the number of stocks for which you wish to bid. Choose a bid price as well. Bidding at the cut-off price or the maximum price at the upper end of the price range is preferable if you want to increase your chances of getting an IPO allotment.

4. In the next step, enter your UPI ID and click the submit button. You must approve the transaction on your UPI app before the exchange accepts your bid.

5. Check the UPI app for the mandatory notification. The application funds will be held until the IPO allotment date.

How To Apply IPO Online Using Internet Banking

To apply for an IPO through Internet Banking, follow the steps outlined below:

1. Use your net banking login ID and password to access your Banking account.

2. Locate and click on the ASBA (Application Supported by Blocked Amount) tab.

3. Select the IPO from the IPO list and click on the 'Apply IPO' option.

4. Fill in the applicant's name and PAN. Also, input the bid quantity and price and click the submit button. If you place your offer before 2 p.m. on a business day, it will be accepted that day. If you put your bid after 2 p.m., it will be scheduled for the following day


We hope you are cleared with the basics of IPO and its types and how to apply online for IPO. Share your thoughts using the comment box below.

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