IPO tend to garner a lot of investors’ attention. IPOs are popular because they have the potential to provide significant gains on the day of the IPO and, after that, in the long term also.
Initial Public Offering (IPO)
An Initial Public Offering (IPO) is the procedure of issuing shares by a private company to raise funds from the general public for the first time. It is the transition phase of a private company that changes its status to a public corporation. The IPO issuer company raises enough capital by going public in the primary market through an IPO and gets an opportunity to expand through acquired capital.
Private and public investors can participate in the IPOs to realize higher profits. Investment banks promote the stocks to fuel the demand for IPOs, prepare company Draft and Red Herring Prospectus (DRHP), fix the share price, issue IPO dates and do various other activities.
Numerous companies want to raise capital in the primary market and are ready to issue their IPOs with the nod of the stock market regulator SEBI. These companies’ IPOs are called upcoming IPOs. The SEBI publishes the upcoming IPOs details on its official website. Investors can continue to check the website to get ready with funds for IPO investments. You can get information about upcoming IPOs from your stockbroker also.
Some of upcoming IPOs are as follows:
- Keventer Agro Ltd
- Droom Technology Ltd.
- Capital Small Finance Bank
IPOs are reserved for different types of investors in different fractions, such as Individual investors, promotors, Qualified Institutional Buyers (QIBs) and High Net-worth Investors. Individuals should check if the upcoming IPO is open for retail investments.
Investing in an IPO
IPOs are one of the popular financial instruments to invest in. Most IPOs in an economy going well are oversubscribed. IPO stocks should be selected only after assessing the company’s financial standing and going through the IPO prospectus. The IPO prospectus – DRHP is approved by SEBI. It gives a fair idea about the company’s strength, promoters, plans to use the IPO funding, investment risks in IPO, etc.
IPOs have the potential to grow your funds manifold. If you get allotted IPO stock, you can hold them for long-term gains or sell them for listing gains.
An individual can invest in IPOs through a Demat account. A Demat account holds your securities in electronic form and keeps it safe from any damage or loss, or theft. It facilitates quick and easy transfer, tracking and monitoring of stocks.
A Demat Account would be sufficient if you want to hold the shares instead of selling them. But, if you’re going to sell your shares in the stock markets, you would need a trading account along with Demat.
Demat Account Opening: Online Process
You can get information about upcoming IPOs on the trading platform offered by the stockbroker. Demat account opening online with a discount stockbroker is easy. You need to complete e-KYC formalities and e-sign the form.
- Access the online demat account opening form available on the official website of a discount broker.
- Enter the required details – your name, address, active mobile number, and email ID.
- Verify the received OTP on your mobile to continue with further steps.
- Upload the scanned copies of documents – PAN card, ID proof, and resident proof.
- Go through the online verification process for your identity. You can record a short video or complete it live through a webcam or mobile.
After verification of your identity and documents, the broker will activate your demat account and provide you with the demat login credentials.
Investors can gain from upcoming IPOs significantly if they make informed choices for companies. Research enough about the issuer company to know the opportunities and risks involved in the IPO. Gauge your risk profile before making investments. Make sure you have an active demat account before the opening date.