Apply for IPO: To apply for an IPO, you can either fill out a physical form and submit it to your broker or apply online through your broker’s website or mobile app. Ensure you have the necessary funds in your account to cover the shares you wish to purchase.
What’s an IPO?
An Initial Public Offering (IPO) is the process by which a company sells its stock to the public for the first time. IPOs are typically used by new companies to raise capital for future business expansion. These shares are initially issued in the primary market at an offer price determined by the main entrepreneur (that is, the one who organizes the syndicate of banks and brokers). The primary market consists of investment banks and brokers brought together by the principal entrepreneur. These banks and brokers distribute shares to institutional and individual investors. The distribution of shares at the offer price is called “participation in the IPO”. Participation in the IPO takes place before the paper is traded for the first time on one of the stock exchanges.
How can I apply for an IPO?
To start investing in an IPO, you need to open a dematerialized or trading account. The documents required to open a dematerialized account are:
- PAN card
- Aadhar Card
- Proof of address
- Proof of identity
After setting up your trading account, you can apply for an IPO online by two methods:
- The ASBA facility is available from most banks
- Through your UPI ID.
ASBA Method (Sustained Blocked Amount Application)
The ASBA method (Application Supported by Blocked Amount) is a process in which the applicant’s money remains in his bank account, but is temporarily blocked until the shares are allocated. Once the shares are allotted, the blocked amount is debited from the investor’s account. If the shares are not distributed, the amount is released.
Online
To apply for an online IPO with ASBA, log into the online banking portal provided by the bank and fill in the required details, including cardless account information. They are the following:
Paperless ID: The Paperless ID is a 16-digit number used to identify a paperless account and is unique to each customer.
Offline
- Download blank ASBA form from NSE (WEB) or BSE (WEB).
- Print the forms and fill the details like personal details, dematerialized account details, offer amount, price etc.
- Send it to the bank. The bank must be designated as a self-certified syndicate bank (SCSB) (WEB).
Through your UPI ID
The process of investing in an IPO through UPI is simple:
- Step 1: Login to your trading account and select the IPO you want to invest in.
- Step 2: Enter the price at which you want to search the stock and the number of lots.
- Step 3: Fill the application form and provide your UPI ID.
- Step 4: Approve the bulk fund request in the UPI app.
- Step 5: It will be done.
What is GREY MARKET PRICE?
The IPO grey market is an unofficial and informal market where IPO shares are traded before they are officially listed on a stock exchange. The IPO grey market is an unregulated and operated market, but its presence is important for any IPO because it gives potential investors an idea of stock market sentiment and IPO demand.
The premium price that an investor is willing to pay over the issue price of the grey market IPO is known as the grey market premium. Kostak rate or Sauda subject price is the price at which IPO/batch applications are sold on the grey market.
How many offers can be placed in an IPO?
Up to 3 bids can be placed in the IPO application. Each bid must be within the price range and the amount must be a multiple of the lot size. The blocked amount would be the highest among the 3 offers.
Accounts required to apply for an IPO online
You need the following three accounts to invest in an IPO and trade in the secondary market afterwards:
- Demat account
- In a Demat account, the shares are held electronically. It is mandatory to have a Demat account to invest in an IPO.
- Bank account
- A bank account is required to make the payment for the requested shares. This is done through the ASBA function (Application Supported by Blocked Amount).
- Business account
- A trading account is required to invest in an online IPO. You can open this account with a brokerage firm or a firm that provides a trading service.
Do You Know?
The pre-application period opens the day before the IPO, making it easier to apply early. However, the award probabilities remain unchanged regardless of the IPO application date. The IPO order can be placed during the pre-application period, as well as between the start date and the closing date of the offer. Orders placed between 10:30 and 16:30 will receive the money order the same day, while orders placed after 16:30 will receive the next day.
The application will also be rejected if the IPO is applied multiple times with different dematerialized accounts and the same PAN.
IPO can be requested if the account is marked as inactive. However, shares cannot be sold until the account is reactivated.