Closed IPO
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An Initial Public Offering (IPO) is a process through which a private company offers its shares to public investors for the first time. The company issues shares to raise funds for business requirements, expansion, debt repayment, or other purposes mentioned in the offer document.
After the IPO process is completed, the company's shares may get listed on recognised stock exchanges such as the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE), allowing investors to trade them in the secondary market.
The following table explains the key differences between Mainboard and Small and Medium Enterprise (SME) IPOs.
| Feature | Mainboard IPO | SME IPO |
|---|---|---|
| Company Size | Generally issued by larger companies | Issued by small and medium enterprises |
| Listing Platform | NSE or BSE mainboard platforms | NSE Emerge or BSE SME platforms |
| Investor Participation | Open to eligible investors based on IPO category | May have different eligibility and lot size requirements |
| Lot Size | Usually lower compared to SME IPOs | Generally higher due to exchange requirements |
| Trading Conditions | Follows mainboard trading rules | Follows SME platform regulations |
Both IPO types are regulated by the Securities and Exchange Board of India (SEBI). Investors may review the offer document and issue details before applying.
The following are the two common methods through which IPOs are issued.
Book Building Method
In the book building process, the company provides a price range called the price band. Investors submit bids within this range. Based on the demand received from investors, the final issue price is decided.
The allotment of shares depends on the number of applications received and the category of investors.
Fixed Price Method
In a fixed price issue, the company decides the share price before opening the IPO. Investors apply at the specified price, and shares are allotted based on the available demand and category-wise allocation.
The following are the general steps to apply for an IPO through a trading platform:
1. Open the IPO section on the platform.
2. Select the IPO available for subscription.
3. Review the issue details, including price band and lot size.
4. Enter the number of lots and bid price.
5. Complete the application using the Unified Payments Interface (UPI) process.
6. Approve the payment mandate request received through the UPI application.
7. Check the allotment status after the IPO closes.
The application process may vary depending on the platform used by investors.
Tips to Increase your Chances of IPO Allotment
Applying through the correct investor category and following the prescribed bidding process can help investors participate in an IPO effectively. However, IPO allotment rules may differ based on the type of issue, investor category, subscription demand, and applicable regulatory guidelines.
Retail investor allocation and allotment mechanisms are not identical across all IPOs. Mainboard and SME IPOs may have different eligibility requirements, allocation structures, and exchange-specific rules. Investors should review the IPO offer document and issue details before applying.
Investors should avoid submitting multiple applications using the same PAN, as this may lead to rejection. For eligible retail investors in book-built IPOs, bidding at the cut-off price may be applicable as per the rules of the specific issue.
Documents Required to Apply for an IPO
The following documents and details are generally required for an IPO application:
- Permanent Account Number (PAN)
- Active Demat account details
- Bank account linked with UPI or application method
- UPI ID for online applications
- Registered mobile number linked with banking details
Investors should ensure that the information provided in the application matches their official records.
Conclusion
Current IPO details such as issue dates, lot size, subscription status, and price bands help investors understand an IPO before applying. The IPO process involves multiple stages, including bidding, allotment, and listing. Investors may review the offer document, company information, and applicable risks before making decisions. Understanding the difference between Mainboard and SME IPOs, application requirements, and allotment process can help investors follow IPO-related information more effectively. Checking updates from recognised sources can help investors stay informed about ongoing and upcoming IPOs.
Here’s the link to our blog on How to Increase Your Chances of IPO Allotment.
How to Apply for an IPO?
Login to your 5paisa account and select the issue in the
current IPO section
Enter the number of lots and price at which you wish to
apply for
Enter your UPI ID and click on submit. With this, your
bid will be placed with the exchange
You will receive a mandate notification to block funds in
your UPI app
Approve the mandate request on your UPI and funds
will be blocked
How to Check IPO Allotment?
You can check IPO allotment status in two ways by visiting -
1. BSE IPO allotment website
2. Registrar's website
Before checking the IPO allotment status, you must select the IPO and enter your PAN.
IPO Refund
Know what is an IPO Refund and what does it mean?
IPO refund refers to the process of returning the money blocked by the bank for an IPO subscription. Since IPO applications are supported by a blocked amount (ASBA - Application Supported by Blocked Amount), the bank marks a lien on the application amount until the IPO allotment. After the allotment list is declared by the company, it sends the information to the bank. If the applicant's name is not on the allotment list, the bank releases the lien and the investment amount returns to its original status, meaning the applicant can withdraw the amount or invest it in another IPO.
