How to Apply for an IPO

 

How to Apply for an IPO

Initial Public Offering (IPO) is the method to raise funds by selling securities or shares to the public in the primary market. In this way, an unlisted company get listed in the national exchanges and a private company get converted into public limited company. IPO is the efficient way to raise capital from people by making them shareholders in the company. It is also an opportunity for the common people to be a part of their favourite corporation. Before getting listed in the NSE, BSE, MCX and in many other national exchanges, companies used to issue shares to the public through IPO to raise capital.
Most of the time, it has been seen that investing in IPO is somehow beneficial, it can increase your financial earning drastically. There is minimum and maximum order limit to buy shares in any company’s IPO. Lot size is generally different for different companies. Most of the companies used to reserve some quantity of shares for their employees only.

Types of IPO

There are two types of IPO:
1. Fixed Price Offering- Some companies set the price of the initial sale of their shares which is known as Fixed Price IPO.
2. Book Building Offering- Company initiating an IPO offers a 20% price band on the stocks to the investors is a type of Book Building IPO. Interested investors bid on the shares before the final price is decided.

Online Ways to Apply for an IPO?

There are two online methods to apply for an IPO, one is ASBA and other one is UPI.

ASBA- ASBA stands for Application Supported by Blocked Amounts (ASBA). It is a process regulated by SEBI to invest in an IPO. This facility is available in the Net banking of your bank account. It allows you to invest in FPOs and IPOs. When you invest in any IPO via ASBA, it holds appropriate funds in your account without actually debiting it.
Steps to apply for an IPO via ASBA
Follow below steps to know how to invest in an IPO via ASBA:
• By using your customer id and password, login in to your net banking account.
• On the left side of the screen, go to request tab.
• Scroll down, find the IPO/Rights issue option.
• You will see a list of upcoming IPOs in next screen.
• Select your desired company IPO and click on apply.
• In the next screen, enter the required information such as your bid price and date of birth.
• Once you proceed, further you will be asked to confirm the amount to be blocked from your account.
• Enter agree to the terms and conditions and submit your application.

UPI- UPI stands for Unified Payments Interface. It is a real-time and instant payment system developed by National Payments Corporation of India. You can invest in any IPO via UPI as payment method through your broker. To avail this facility, you need a demat or trading account. It is a very simple process, your fund will get blocked in your demat/trading account, you can not use that blocked amount for any trading. After allotment of shares, blocked fund will get debit if you get the shares or blocked fund will get release if you are not lucky enough to get the shares.
Steps to apply for an IPO via UPI
Follow below steps to know about how to invest in an IPO via UPI as payment method:
• Login to your demat/trading account.
• Select any desired upcoming company IPO.
• Enter your bid price and total no of lots you want to buy.
• Enter the required details in the application form and provide your UPI id.
• Now, approve the blocked fund request on the UPI app.