initial public offering

 What is the IPO?

IPO stands for initial public offering which is the process of changing private ltd to become the public Ltd. company. Companies generally enter the public to raise funds. It is mandatory to through all IPOs of various processes determined by the exchange. After the IPO process is complete, the company's shares can be open to the public to trade on this exchange. This process can also create opportunities for smart investors to get interesting returns to their investments but there are opportunities for losing money, therefore, it is important to understand at least the basis of the base before investment.

Steps to the Process of First Public Offering (IPO)

1. Employment of Emissions or Investment Banks - Underwriters help companies prepare the IPO to raise expected funds.

2. Registration for IPO - Creating a Red Herring Prospectus Draft (DHRP) is required to be in accordance with the Company.

3. Verify by SEBI - After DHRP according to the set guide, SEBI allows the company to continue with the IPO.

4. Application to Exchange Stock - The company then sends an application to the exchange where it plans to float the problem.

5. Roadshow - The team advertises the IPO in an effort to attract potential investors or get their attention.

6. IPO prices - IPO prices through fixed price models or book construction model processes.

7. IPO and allotment occur - share allotment within 10 days from the date of the problem.

Fixed price problem

In fixed price problems, bid prices are evaluated by the company along with their underwriters. This price is usually corrected by evaluating total assets, liabilities, and they will go through every other financial aspect. They then work on these numbers and repair prices for their offer. Prices are set after considering all qualitative and quantitative factors. In fixed price problems, prices may be undervalued during the company's IPO. Prices are mostly lower than market value. As a result, investors are always very interested in fixed price problems and finally reassess the company positively.

Book Construction Problems

Book building problems are a relatively new concept in India compared to other parts of the world. In the problem of building construction, there is no fixed price, but band prices or range. The lowest and highest prices are called 'floor prices' and 'closed prices' each. You can bid stock with the desired price you want to pay. After that the stock price is set after evaluating the offer. The demand for shares is known after every day when this book is built.

IPO Glossary: IPO Publisher is a company that issued shares to collect capital. Underwriter: Underwriters are bankers, financial institutions, or brokers who help companies guarantee IPOs. This acts as a media broker between the public and publisher. DRHP: This stands for Draft Red Herring Prospectus, also known as a bidding document. This is a preliminary registration document prepared by investment bankers for IPO issuing companies if there are problems built books. The document contains financial information and operational companies along with some other information such as why he tries to collect money. RHP: Red Herring Prospectus is a preliminary registration document submitted to Sebi in case of a problem built book. It does not contain the number of shares or stock prices offered in trouble. Band price: Band Price is basically a lower price and the top price per share used by the company to the company. Problem Size: The size of the problem in the IPO means the number of stock problems multiplied by the number of each share. Undersubscription: This is the situation where the number of shares applied by the public is less than the number of shares issued by the company. Oversubscription: This is the situation where the company receives more applications than the number of shares offered by the public