Upcoming IPO

The process through which a private business becomes public is known as an IPO. When a corporation goes public, it engages with investment banks to introduce its shares to the public market, necessitating thorough due diligence, advertising, and regulatory compliance. Selling shares is equivalent to selling a piece of the company's equity to investors.

The initial offering is reserved for major investors like hedge funds and banks. Thus, purchasing shares in an upcoming IPO becomes challenging. Common investors can buy shares in a new IPO firm soon after the IPO.

Markets are of two types: primary markets and secondary markets. Primary markets issue the Upcoming IPOs.

Upcoming IPOs are IPOs that are have filed DRHP and are expected to open in the coming week or month of 2024.

IPOs have seldom witnessed such heavy demand from investors as they have in previous years. Data shows that the combined collection for IPOs has well crossed the INR 100 lakh crore mark this year. And, with a month to go before the year ends, investors might experience similar investor participation in upcoming IPOs.

The Securities and Exchange Board of India (SEBI) allows four categories of investors to bid for shares during any upcoming IPO process.

Qualified institutional investors (QII): QIIs include commercial banks, public financial institutions, mutual fund firms, and foreign portfolio investors registered with SEBI. Underwriters attempt to sell IPO shares at a profit before the Upcoming IPOs. SEBI requires institutional investors to sign a lock-up contract for 90 days to guarantee minimum volatility throughout the IPO process.

Anchor investors: QIIs who apply and have assets worth more than Rs 10 crore is considered an anchor investor. They can purchase up to 60% of the shares reserved for qualified institutional investors.

Retail investors: These investors can invest up to Rs. 2 lac in each new IPO lot. The retail quota requires a minimum allocation of 35%. SEBI has mandated that if the offer is oversubscribed, all retail investors be issued at least one lot of shares. A lottery system is used to distribute IPO shares to the general public if distributing one lot to each investor is impractical.

High-net-worth individuals (HNIs) or non-institutional investors (NIIs): HNIs make more than Rs 2 lakh investments. Non-institutional investors are institutions that seek to invest more than Rs 2 lakh. The only distinction between a QII and an NII is that the latter is not required to register with SEBI.

1. Pick the IPO that you want to invest in

Investing in an IPO necessitates study since we may lack previous data on performance, management, and other critical basic variables. Deciding which IPO to invest in is an important first step. Every company that announces an IPO distributes a prospectus to the public, which contains information about the firm's operations and future intentions. Before making a choice, thoroughly read this prospectus and research the firm.

2. Create the Necessary Accounts

To invest in a fresh IPO and later trade it on the secondary market, you'll need the following three accounts:

• Demat account: Your shares are kept in electronic form in a Demat account.
• It is essential to fund your stock market operations. A bank account might be helpful when applying for an IPO. Almost all net-banking systems allow you to apply for IPOs using the Application Supported by Blocked Amount (ASBA) feature.
• Trading account: A trader can purchase and sell stocks through a trading account.

3. What happens when you submit an IPO application?

After submitting an IPO application, your bank account will be debited (blocked) for the amount you choose to invest. Your balance will still show the amount, but you cannot spend it since it is blocked. If you are issued the shares, the cost will be deducted from your account after the complete distribution. If you did not obtain any shares in the IPO, the funds will be released and made available for use.

The best way to increase your chances of IPO allotment is to apply with multiple demat accounts. Multiple applications can increase the odds of IPO allotment. You need to bid at the highest price, every IPO comes with a price band, with cut-off referring to the highest price within the band. Third thing to remember is, Do Not Wait For The Final Day - Investors often wait for the HNI and QIB subscription figures to determine investor sentiments before investing themselves. However, generally, banks accept applications only up to 4 PM, and if you submit after the specified time on the final day of the IPO, your application might get rejected. And lastly, invest in the parent company by applying in the shareholders category. If the IPO is launched by a company whose parent company is already listed on exchange(s), you can get higher chances of IPO allotment by applying through the ‘Shareholder’ category. 

Read our blog on How to Increase Your Chances of IPO Allotment to know such interesting details.

Any Indian citizen with a PAN card can open a Demat account and can apply for an IPO in India. While you do not need a trading account to apply for an IPO, you may need to sell your holdings if the IPO is credited to your account.
Besides the eligibility, you must also research the company you wish to invest in. While previous year has so far been a great year for IPOs, some companies have still shown a lackluster performance. Hence, proper research is vital before investing in an IPO.

UPI as a payment option - Fill in the bid details in the application form and process with your UPI ID. IF you do not have a UPI Id, create one, find here the list of Banks on UPI. You can use your UPI ID to apply with three options, read here to know the New Process for applying in IPO using UPI ID

A Bank Account - ASBA (Application Supported by Blocked Amount) is another option to apply for an IPO. However, you cannot apply for an IPO if your account does not have a sufficient balance.

To help you plan your IPO investments better, check the upcoming IPOs in 2024. Big names like Puranik Builders, FabIndia, TVS Supply Chain Solutions and Oravel Stays (OYO) are expected to issue IPOs in 2024.