Article

Procedure: Apply For an IPO
February 06 , 2013

1) IPO is used for a company to get itself listed to the public. Its shares can thereafter be bought by mutual funds, insurance companies, foreign institutions and indeed you and I

2) Understand the business of the company you are applying to, and get comfortable with its valuation. You will get the prospectus of the company at http://www.sebi.gov.in, and you will also find several analyst reports in different websites. Do not apply based on TV ads or agent,tips

3) Initially you should be applying in the retail category. This means you apply less than Rs. 1 lakh, and pay the entire amount upfront

4) Most IPOs follow a process called book building. This is something like an auction of paintings , investors can bid what price they want to pay. As a new investor, you would rather stay away from this,using the option called cut-off price, given in the application

1) IPOs are compulsorily in Demat form, so you need to open or have a DP account to apply for one

2) While you don't need a trading account to apply for an IPO, you will need it to later sell the shares that you got. So you might as well open a trading account if you do not have one 

1) Several online trading accounts give facility to apply for IPO, this is the most painless method

2) Transfer money to the online IPO account from your Bank account, and apply for the IPO using the procedure given in your trading account

3) In offline method, you need to fill an IPO form. These forms are available with your broker or even with street vendors nowadays. You also need to prepare a cheque for the subscription amount and hand both over at the nearest office of the registrar (given in the form itself)

1) Getting allotment in IPO depends on how many people applied, as against how many shares were on offer. If too many people applied, you may get only a small fraction of the shares you applied for

2) Typically the allotment process takes about 3 weeks, though this duration is fast coming down

3) The shares come directly to your DP account specified. You only get a courier confirming this. These shares can later be sold through your trading account once the listing has happened

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