Initial Public Offer (IPO)
IPO- Own a company without owning it
IPO is the source for the company to raise funds from the primary market. Here, the company issues shares for the first time to the public. Once the company decides to sell its securities in the primary stock market, it gets listed on the stock exchange. Initial public offering (IPO) allows the company to raise the funds from the primary market- meeting the project costs and receive exposure in the market through the listing on the stock exchange.
When a company lists its shares on the stock exchange, the price paid by the investor for the issued shares is directly paid to that company. This allows the company to bring a huge number of investors to provide the funds for capital growth or compensating the debt. IPO is the instrument for the company to raise capital in a short duration and this is the very reason why many private companies go public.
IPO is a huge source of funds for a company with extensive maturity.
The Process To Invest In IPO:
To apply for IPO online you just need to:
- Open Demat and Trading Account with ACMIIL.
- Choose the running IPO available in Market.
- Place your bid with your Valid UPI id's.
Who are eligible to invest in IPO?
Not all IPOs are open to general public. The underwriters decide the category of people whom they want to invest in their Company. So, there are three kinds of applicants,
- Retail Individual Investor (RII) - if you are an investor who applies for small value of shares
- Non-Qualified Institutional Investor (NII) - if you are an investor who applies for large value of shares and you do not qualify as Qualified Institutional Buyer category. They include Companies, NRIs, Corporate entities, Trusts, and Societies.
- Qualified Institutional Buyer (QIB) - the investor who bids for securities is a financial institution which is declared as companies in the section 4A of the Companies Act or a foreign institutional investor who is registered with SEBI.
Why one should apply in an IPO?
- Limited capital up to Rs.15000, which can be arranged easily
- Convenient to invest - with UPI id the money will be blocked by BHIM application
- The fund will unblock on 6th working day of IPO if shares are not allotted.
How to apply for IPO on investmentz.com
To apply for the IPO online with UPI, following are the steps to be followed:
- Select the currently running IPO
- Fill up the IPO bidding details on the screen.
- Enter your UPI ID in the payment section.
- Select lot size and bid price.
- Now you will get a fund block request on your selected UPI app.
- Approve the request to block the desired amount for the IPO.
- Your funds will be blocked until allotment.
- On allotment the blocked amount will be debited. If you didn't get the allotment the blocked funds will be credited to your account.
- At any given point in time, UPI can become a mandatory payment method to issue IPO.
- For a retail applicant, the limit for IPO application is Rs 2 lakhs per transaction on UPI.