Investing in an Initial Public Offering (IPO) can be an exciting opportunity for investors looking to get early access to a company's shares before they become publicly traded. IPOs allow you to get into a company’s shareholder base at the very ground level. People who invest in stocks often keep an eye out for upcoming IPOs. In this blog, we will explore how you can invest in an IPO. But first, let us take a step back and understand what an IPO is.
What is an IPO?
Investing in an Initial Public Offering (IPO) can be an exciting opportunity for investors looking to get early access to a company's shares before they become publicly traded. IPOs allow you to get into a company’s shareholder base at the very ground level. People who invest in stocks often keep an eye out for upcoming IPOs. In this blog, we will explore how you can invest in an IPO. But first, let us take a step back and understand what an IPO is.
An Initial Public Offering (IPO) is when a private company offers its shares to the public for the first time. A private company is owned 100% by the founders, stakeholders, and early investors, if any. Companies then launch IPOs to raise capital, and it allows investors to own a portion of the company.
Most IPOs, when they are launched, get an overwhelming amount of response. It means, there are more people hoping to get an allotment of shares than the actual number of shares the company is going public with. So, not everyone gets the IPO shares.
What are the documents required to apply for an IPO?
- PAN Card: A valid Permanent Account Number (PAN) is essential.
- Demat Account: Investors must have a Demat account to hold and trade the shares. If you do not have a Demat account, you can create an account for free with Ventura and pay 0 account maintenance fee.
- Bank Account: A linked bank account for making payments. An autopay mandate will be created in your bank account when you apply for an IPO.
What are the eligibility criteria to apply for an IPO?
- Applicants must be 18 years of age or older
- Active Demat account
- Applicants must have sufficient funds in their bank account (obviously, right?)
How to apply for an IPO online?
- Log in to your Demat account.
If you don’t have one, save yourself the hassle and create a free Demat account with Ventura within minutes. - Choose the IPO and investor category
Under the open IPOs section, make sure you select the right IPO and the number of lots you wish to apply for. You can apply via retail, HNI (high net-worth individuals), or employee category. To learn how to apply for an IPO under the HNI category, click here. - Authorise the application
You will receive a mandate in your bank account, whether it’s netbanking or UPI. The IPO will be applied through ASBA, or Application Supported by Blocked Amount. Basically, your bank will block the amount required for the IPO until the allotment is announced. Until then, no money will be debited.
Also read: Does applying more lots increase your chances of getting an IPO?
How to apply for an IPO offline?
- Get the application form
Visit your bank or broker to collect the IPO application form. - Fill the form and submit
Submit the completed form with your personal, Demat, and bank account details. Ensure you have authorised the ASBA facility. Your bank/broker will guide you on how to apply for an IPO online with ASBA.
Why should you apply for an IPO online?
- Convenience: Apply for IPOs from anywhere without visiting a bank or filling out physical forms.
- Faster Processing: Online IPO applications are processed quickly, reducing the risk of missing deadlines.
- Easy Tracking: Monitor your IPO application status and allotment updates in real time.
Conclusion
Investing in an IPO can be a lucrative option, but it's important to understand the process, eligibility, and documentation required. Online applications offer convenience and speed, making the IPO investment journey more seamless for retail investors. By following the necessary steps and ensuring proper documentation, you can easily participate in IPOs and capitalise on potential growth opportunities.
