||What is an IPO
||What are the different types of IPOs?
||What is meant by Primary Market and Secondary Market?
||When is the payment for the shares made?
||What is the procedure for applying for an IPO at SSJ Finance?
||What are the necessary details to be mentioned in the IPO Application?
|What is an IPO?
An Initial Public Offer or IPO is the first sale of a companys shares to
investors on a public stock exchange. While IPOs are effective at raising capital, being
listed on a stock exchange imposes regulatory compliance and reporting requirements.
When a shareholder sells shares it is called a "secondary offering" and the
shareholder, not the company who originally issued the shares, retains the proceeds of the
offering. To avoid confusion, it is imporatnt to remember that only a company which issues
shares can make a "primary offering". Secondary offerings occur on the
"secondary market", where shareholders (not the issuing company) buy and sell
shares to each other.
|What are the different types of IPOs?
There are two types of IPOs. These are listed below:
Fixed Price Issue In this case, the issue price is pre ascertained by the issuer.
Book Building In this case, an indicative price range is declared by the company
for a public offer of its equity shares. Interested investors place bids within this price
range for the quantum of securities they want to subscribe to. Prospective investors can
revise their bids at anytime during the bid period, that is, the quantity of shares or the
bid price or any of the bid options. Usually, the bid must be for a minimum of 500 equity
shares and in multiples of 100 equity shares thereafter. By recording the bids (quantum of
shares ordered and the respective prices offered) received in a "book", the
issuer makes an assessment of the demand for the securities proposed to be issued. After
the bid closing date, the book runner and the company fix the issue price and decide the
allocation to each syndicate member. Thus, book building method helps in optimum price
discovery for the security.
|What is meant by Primary Market and Secondary Market?
Primary Market refers to a market which provides the channel for creation and sale
of securities. Primary market provides an opportunity to investors to apply & own
stocks issued by the corporate (as well as the government) through an IPO (Initial Public
Offer). A corporate raises capital from the public to meet its expansion plans or
discharge financial obligations.
The resources in this kind of market are mobilized either through the public issue in
which anyone can subscribe for it, or through the private placement route in which
the issue is made available only to a selected group of subscribers such as banks, FIs,
MFs and high net worth individuals. In private placement, the stringent public disclosure
regulations and registration requirements are relaxed since these securities are allotted
to a few sophisticated and experienced investors,. The Companies Act, 1956, states that an
offer of securities to more than 50 persons is deemed to be public issue.
Secondary Market refers to a market where shares are traded after being initially
offered to the public in the primary market. It is a market in which an investor purchases
shares from another investor through stock exchange. Majority of the stock trading is done
in the secondary market. The secondary market enables participants who hold securities to
adjust their holdings in response to changes in their assessment of risk and return. They
also sell securities for cash to meet their liquidity needs.
|When is the payment for the shares made?
The bidder has to pay the maximum bid price at the time of bidding based on the highest
bidding option of the bidder. The bidder has the option to make different bids like
quoting a lower price for higher number of shares or a higher price for lower number of
shares. The syndicate member may waive the payment of bid price at the time of bidding. In
such cases, the issue price may be paid later to the syndicate member within four days of
confirmation of allocation. Where a bidder has been allocated lesser number of shares than
he or she had bid for, the excess amount paid on bidding, if any will be refunded to such
| What is the procedure for applying for an IPO at SSJ Finance?
To apply in an IPO, you can collect the IPO Application Form directly from your nearest SSJ Finance branch. To get a list of our branches, please click here.
Alternatively, you can Contact Us or e-mail us at firstname.lastname@example.org and request for any IPO Application Form.
The duly filled form, along with the bank cheque, has to be submitted at any of our collection centres (SSJ Finance branches). The shares allotted to you will be directly credited to your demat account and any excess application money will be refunded by a direct credit to your bank account.
For your convenience, you will soon be able to apply to all IPOs, online.
|What are the necessary details to be mentioned in the IPO Application?
To apply for an IPO, the applicant needs to mention the details of his Bank account,
Pan Card and Demat Account along with his other personal details in the IPO Application