Welcome, Guest
Email Password: Remember me

What is an IPO and why do companies go for it
(1 viewing) (1) Guest
Finance
  • Page:
  • 1

TOPIC: What is an IPO and why do companies go for it

What is an IPO and why do companies go for it 6 years ago #37

I wanted to know why a large number of companies go in for an IPO. Also who are the players involved in the public issue process

Re: What is an IPO and why do companies go for it 6 years ago #39

  • riyasen
  • OFFLINE
  • Fresher
  • Posts: 12
  • Karma: 0
Initial Public Offering (IPO) is the first issue of shares by the company to the public for raising funds. A company may need to raise money from the public for various reasons such as raising funds for new projects, expansion of existing capacities, repayment of high cost debt, divesting part of promoter holding in company, etc. Investing in equity shares of these companies is termed as IPO investing.

Re: What is an IPO and why do companies go for it 6 years ago #40

  • priya123
These are the 3 major players

1) Underwriter

An underwriter is a bank, brokerage house, financial institution or merchant banker who takes the responsibility of subscription of the issue. It arranges for the subscription utilizing its network of distributors. In case it fails to get full subscription to the issue, it has to subscribe to the balance unsubscribed shares. Underwriters charge underwriting commission to the issuing company. A Company, by appointing underwriters, assures itself of complete subscription to the issue.

2) Lead manager

A lead manager is a SEBI registered entity who certifies that the issue is as per the various rules, regulations and policies and the facts and disclosures mentioned in the prospectus are correct. A lead manager is also known as a ‘book running lead manager’ and completes the various formalities related with the issue, right from preparing the prospectus to the final completion of the issue (to ensure that the entire process was conducted as per the requisite guidelines). Merchant bankers or investment bankers may also act as lead managers.

3) Registrar

The registrar is responsible for controlling the processing of applications received under the public offer. It is responsible for scrutiny, processing, allotment of shares, issuance of refunds and handling post allotment investor queries. The registrar keeps a record of the issue and ownership of the shares and works in compliance with the other regulatory bodies such as the Registrar of Companies (ROC).

Re: What is an IPO and why do companies go for it 6 years ago #42

  • sheetalm
Apart from this information, we need to know the following things associated with an IPO

Generally, All Companies Follow Either Of The Following 2 Methods While Arriving At The Issue Price:
Fixed price method

As the name suggests, under fixed price method of public issue, shares are offered and allotted at a fixed price which is known to subscribers at the time of making an application.
Book building method

Under the book building method, as a subscriber you are not aware of the final price at which the allotment will take place. Shares are offered within a price band, between which you need to apply. The final allotment price (cut off price) is decided after the closure of the issue, based on the bids received at various price levels within this band.

If you have applied at the cut off price or higher, you will be eligible for allotment, and the excess application money will be refunded to you. In case, your bid price is lower than the cut off price, you will not be eligible for allotment.

Further there are 3 types of subscribers for an IPO
1. Retail Investors
2. Non Institutional Bidders
3. Qualified Institutional Investors.

Re: What is an IPO and why do companies go for it 6 years ago #44

Thanks a lot everyone for the insightful information about the IPO

Re: What is an IPO and why do companies go for it 6 years ago #80

heyy! thanks this is useful!! thanx

Re: What is an IPO and why do companies go for it 6 years ago #81

useful information abt IPO. thanks priya123 and sheetalm.
  • Page:
  • 1
Time to create page: 0.25 seconds