With more IPOs in the equity market, investors are spoiled for choice. As a result, knowing which IPOs are the best on the market can be challenging. First, however, let's start with the basics of IPOs and learn how to invest in IPOs.


IPO MEANING

The word IPO stands for initial public offering. It is a process in which a private company raises money by selling its shares to the general public. The IPO also helps the company with capital influx which could help the company expand and grow faster.



Why should apply for an IPO?

There are a few things to keep in mind before buying an IPO.
Required for long term investment.

Determine investment criteria and risk.

Considering such various points you should invest in IPO and it will help you to choose IPO.

Before choosing an IPO it is necessary to get complete information about the company issuing the IPO.

Is the price of IPO fair or not?

Is the market bullish or bearish?

Before listing a company's IPO, all available resources should be used, such as reading details in their prospectus, their expansion ideas, long-term goals, etc.

Investing in IPO i.e. equity of a company is the best strategy to achieve your goals in the long run. The value of the stocks you own can increase annually and enable you to build wealth. It is imperative to invest keeping all those things in mind.


For the initial sale of shares, the issue price is disclosed to the investors in advance. The demand for the shares is known to the investors only after the closing of the IPO.



How to invest in an IPO?

Interested investors need to follow these steps to invest in an IPO:


  • Decision

Deciding which IPO to apply for can be confusing for new investors. However, investors can take an informed decision after reading the prospectus of the issuing company.


  • Arrangement of capital

If an investor has decided to invest in an IPO in which he wants to invest, the next step is to plan the money.


  • Open a demat-cum-trading account

An investor needs to open a demat and trading account to invest in IPO shares. Then, the investor can apply through their trading account. Opening a new demat account can be relatively easy for a new investor and can be done electronically by submitting Aadhaar card, PAN and other identity proofs.


  • Application Process

After activating the investor's demat cum trading account, the following investment phase in the IPO should be a blocked account supported application. In case of payment (ASBA) procedure is followed. It means that the money will be blocked from your bank account until the allocation starts. When the IPO closes, a certain amount is secured if no shares are allotted to you.


  • Bidding

As explained above, the company sets the price range in the share types and the investors have to bid in the given price range. Lot size of shares is referred to as the minimum number of shares that an investor applies for in an IPO.


  • Allocation

Suppose the investor is lucky enough to receive the full allocation. In that case, the entire amount is debited from the bank account. Once the IPO process is over, the investor will get the allotment letter within six working days. Sometimes due to high demand for shares, partial shares may be allotted; In that case, the required amount is debited while the remaining amount is unblocked.


After that, the listing is done in the IPO market and accordingly the shares are traded at the listed price.