IPO in India means the new offer of a company's shares to the public in the country's capital markets. Initial Public Offer (IPO) in India is done through various methods like method of book building, method of fixed price or a mixture of both.
A short note on Initial Public Offer (IPO) in India:
Initial Public Offering (IPO) in India means the selling of the shares of a company, for the first time, to the public in the country's capital markets. This is done by giving to the public, shares that are either owned by the promoters of the company or by issuing new shares.
During an Initial Public Offer (IPO) the shares are given to the public at a discount on the intrinsic value of the shares and this is the reason that the investors buy shares during the Initial Public Offering (IPO) in order to make profits for themselves.
IPO in India is done through various methods like book building method, fixed price method, or a mixture of both. The method of book building has been introduced in the country in 1999 and it helps the company to find out the demand and price of its shares. A merchant banker is nominated as a book runner by the Issuer of the IPO. The company that is issuing the Initial Public Offering (IPO) decides the number of shares that it will issue and also fixes the price band of the shares. All these information are mentioned in the company's red herring prospectus.
During the company's Initial Public Offering (IPO) in India, an electronic book is opened for at least five days. During this period of time, bidding takes place which means that people who are interested in buying the shares of the company make an offer within the fixed price band. Once the book building is closed then the issuer as well as the book runner of the Initial Public Offering (IPO) evaluate the offers and then determine a fixed price. The offers for shares that fall below the fixed price are rejected. The successful bidders are then allotted the shares.
Major IPOs in India are:
- Reliance Power IPO
- Wockhardt Hospital IPO
- KNR Constructions Ltd. IPO
- Manjushree Extrusions Ltd IPO
- J Kumar Infraprojects Ltd. IPO
- Future Capital Holding Ltd IPO
- Cords Cable IPO
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