Recently, the Zomato IPO/Initial Public Offering created quite a furore in the market. Zomato itself created a hype through their popularly quirky social media handles. This led to many investors, including a few first-timers, getting excited about the launch.
Published on 28 February 2023
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If you were one of the people confused by the entire hoopla and about the intricacies of an IPO investment, here is a closer look at some common queries regarding an IPO, starting from the meaning of an IPO.
What is IPO?
The IPO full-form in the share market is Initial Public Offering. IPO/Initial Public Offering refers to a process where a privately held organisation goes public by trading its shares in the stock market. As a result, these organisations obtain capital from the primary market to further care for their businesses.
Investing in an IPO could be a smart move for you as an investor. However, not every investment in an IPO would be great. In the stock market, benefits and risks go hand-in-hand. So, before joining the bandwagon, you need to understand all the basics related to the same.
How Does a Private Company Offer an IPO?
Going public for a private limited company is an overwhelming process that’s tough for most of them to direct alone. Any private company that plans an IPO listing not only has to prepare itself for public inspection, but it also needs to file a lot of financial paperwork to meet the needs of the Securities and Exchange Board of India (SEBI).
Before becoming a public firm, a company hires an investment bank to handle the IPO/Initial Public Offering. Both of them then works out the monetary details of the IPO in an agreement. Soon after, they file for a registration statement with SEC, along with the underwritten agreement. SEC then scrutinises the information, and if deemed fit, it allows a date for the company to announce the IPO.
Why Does a Company Offer an IPO?
The primary aim to invest in an IPO is to raise money from the open market. Every business needs finance to get going, expand, improve their services, repay their loans, etc. Trading stocks or shares in the market might mean increased liquidity.
Also, by doing so, the company opens the door for its employees to have stock ownership or other compensation plans of that sort. This policy also attracts the crème de la crème of talents in the organisation.
Also, when a company goes public, it essentially means that they have gained quite a good amount of success to get its name flashed in front of the world in the stock exchanges. It is, therefore, a matter of great pride and credibility for them.
When the market turns demanding, a company can always issue extra stocks. This paves the way for mergers and acquisitions as those stocks can be issued as part of a deal.
Why Should You Invest in an IPO?
Now that you know what IPOs are, you might be having thoughts of investing in an IPO. So, here are a few reasons why doing so might be beneficial for you:
To invest in an IPO, as an investor, you can gain some key advantages. If you can invest in the same at an early stage, you can get an early chance to own a stake in that company which might reap high returns in the years to come.
If you are looking for a long-term investment plan, IPO investments could be a great option for you. This is because, by doing so, you can also align yourself as an investor in the company’s future success.
An IPO investment is also a more transparent form of investment as its price per security should be explicitly stated for all public investors. Also, as every investor, big or small, has the same information, such investments equal the playing ground for all.
Things To Keep in Mind Before Investing in an IPO
So, now that you know the concept regarding IPOs in India and how they can benefit you if you invest in them, here are certain factors that you need to keep in mind before taking the final leap:
Before investing in an IPO, you should determine your investment criteria first. This will include your investment capital, your risk factors, and your long-term monetary goals. This way, it will be easier for you to select the IPO listing of your choice.
Before selecting the IPO listings, do exercise caution. You need to conduct a thorough round of research about the organisation’s valuation, fundamentals and past performances.
Please make use of every information available to you about the IPO listing, like the details in their prospectus. In addition, pay fine attention to the organisation’s plan of action, their future expansion goals, and every other important detail regarding their prospects.
How to Invest in an IPO?
So, now that you are sure about your investment plan, how do you start the process? It’s pretty simple. So, once you find an IPO of your choice for investment, you need to open a Demat Account at first, along with a trading account.
Here, you need to note that you’ll typically need a Demat account only for investing in an IPO. However, if you wish to sell those shares to the secondary share market in the future, you will need a trading account. Check whether your mobile number is linked to your bank account.
Make sure to analyse the IPO analysis provided by industry experts and leading publications. Investing in an IPO is subject to specific risks. Ensure that you do a thorough analysis of the company, the IPO price, future prospects, etc., before investing.
Log into the Trading Application or Website.
Navigate to the Upcoming IPOs section.
Choose the type of investor and the specific IPO you wish to apply for.
Enter your Bid Price and the number of shares.
You will also need to provide a duly filled and signed ASBA form, which authorises banks to block the money in your linked bank account for the purchase of an IPO. The total value of the shares you applied for will be blocked in your bank account. The entire amount will be unblocked if there is no allotment of shares. If there is a partial allotment, the applicable amount will be debited, and the rest will be unblocked.
Conclusion
An IPO/ Initial Public Offering investment could be a lucrative opportunity for you as an investor. However, a lot of research about the IPOs listed in the market is essential to save yourself from any financial risks in the future. So, choose wisely, and you shall thrive.
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The common question amongst IPO investors is - how can I increase my chances of a successful IPO allotment?
Whether you are a first-time investor or an experienced one, the allotment process in the IPOs might leave you confused. As the recent public offers are attracting huge subscriptions, it is becoming tough for investors to get the IPO/Initial Public Offering allotments.
An IPO/Initial Public Offering is offering the shares of a private company to the public for the first time in the stock market. An IPO allows an organization to raise money from the public, individual investors.
Companies always need money to operate and to expand their business. Due to this, they often turn to public investors to source this money. Such companies are termed as ‘issuers’ in the stock exchange of India. And an issuer can do this in two ways; through an IPO or an NFO.
The common question amongst IPO investors is - how can I increase my chances of a successful IPO allotment?
Whether you are a first-time investor or an experienced one, the allotment process in the IPOs might leave you confused. As the recent public offers are attracting huge subscriptions, it is becoming tough for investors to get the IPO/Initial Public Offering allotments.
An IPO/Initial Public Offering is offering the shares of a private company to the public for the first time in the stock market. An IPO allows an organization to raise money from the public, individual investors.
Companies always need money to operate and to expand their business. Due to this, they often turn to public investors to source this money. Such companies are termed as ‘issuers’ in the stock exchange of India. And an issuer can do this in two ways; through an IPO or an NFO.
Sharekhan Comtrade Private Limited (TM) operates the web site accessible from the URL www.myespresso.com (the “web site”').
Sharekhan Comtrade Private Limited is committed to protecting your privacy and utilising technology that gives you the most powerful, safe, online experience that you can get anywhere else.
Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.
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System Data:
Sharekhan Comtrade Private Limited uses your IP address to help diagnose problems with our server and to administer the web site. Your IP address is used to identify you and your shopping cart and to gather broad demographic information.
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Sharekhan Comtrade Private Limited may operate a number of co-branded sites. Policies regarding information collection and sharing may differ on some of these co-branded sites. If you have any particular questions, you should check the privacy statement that appears on each co-branded site.
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The Web Site uses an order form for customers to request information, products and services. The Web Site collects visitors' contact information (like their mobile number or e-mail address), unique identifiers (like their PAN number) financial information (like their account or credit card numbers) and demographic information (like their pin code, age or income level). Contact information from the order form is used to send orders, information about Sharekhan Comtrade Private Limited, and promotional material from some of Sharekhan Comtrade Private Limited's partners to the visitors of the Web Site. The visitor's contact information is also used to get in touch with the visitor when necessary. Financial information that is collected is used to check the users' qualifications and bill the user for products and services. Unique identifiers (such as PAN numbers) are collected from Web Site visitors to verify the user's identity.
Surveys and Contests:
The Web Site's online surveys ask visitors for contact information (like their mobile number or e-mail address) and demographic information (like their pin code, gender, age or income level). The Web Site uses contact data from its surveys to send the user information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Ltd.'s partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below. Demographic and profile data is also collected at the Web Site. The Web Site use this data to tailor its visitor's experience at the Web Site, showing them content that it thinks they might be interested in, and displaying the content according to their preferences. This information is shared with advertisers on an aggregate basis.
Sharekhan Comtrade Private Ltd run contests on the Web Site in which we ask visitors for contact information (like their e-mail address). Sharekhan Comtrade Private Limited uses contact data from its contests to send users information about Sharekhan Comtrade Private Ltd. and promotional material from some of our partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below.
Third-Party Advertisement Servers:
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Disclosure of Customer Information :
Sharekhan Comtrade Private Limited and www.myespresso.com shall not deliberately disclose customer's personally identifiable information to any unauthorized third person, save and except where such information shall be disclosed in good faith and for the purpose of law for the time being in force or to protect the rights and property of Sharekhan Comtrade Private Limited and www.myespresso.com.
Public Forums :
The Web Sites makes chat rooms, forums, message boards and/or news groups available to its users. Please remember that any information that is disclosed in these areas becomes public information and you should exercise caution when deciding to disclose your personal information.
Supplemental Information :
The Web Site supplements the information that you provide with information that is received from third parties.
The Web Site DOES NOT entice by the prospect of a special game, prize or other activity, to divulge more information than is needed to participate in the activity.
Further to the above, in light of the recently notified Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (Hereinafter referred to as the Rules)
The following shall be deemed to be sensitive information :
Password;
Financial information such as Bank account or credit card or debit card or other payment instrument details;
Physical, physiological and mental health condition;
Sexual orientation;
Medical records and history;
Biometric information;
Any detail relating to the above clauses as provided to body corporate for providing service; and
Any of the information received under above clauses by body corporate for processing, stored or processed under lawful contract or otherwise:
provided that, any information that is freely available or accessible in public domain or furnished under the Right to Information Act, 2005 or any other law for the time being in force shall not be regarded as sensitive personal data or information for the purposes of Rules.
Collection of Information:
Compliance with KYC guidelines as per SEBI / Exchanges / Or any other Act, law or regulation requiring the same and any internal KYC guidelines formulated by Sharekhan Comtrade Private Limited.
In order to provide enhanced trading experience to the client.
In order to provide any further information to be provided to regulators.
Such information may be collected in a manner that the client is always aware of the collection and purported usage of the same. The client shall have an option to withdraw consent to share the information. However such intimation shall be required in writing. Such intimation shall only be taken into account from the date on which the same is received. Sharekhan Comtrade Private Limited may choose to stop services to such a client in case such intimation is received. Such information shall only be used for the purpose it is collected.
Clients would be allowed an option not to disclose any information to be collected, provided the same is in compliance with regulatory requirements.
Disclosure of information:
Disclosure of sensitive information would be as per the terms agreed by the clients. For any change in such terms, the clients would be informed.
Provided no consent may be required in case the same is being shared as per compliance guidelines or as required by regulators.
Any information being disclosed to third parties would be in accordance with the Rules and would be done provided such third party has the same level of compliance guidelines as Sharekhan Comtrade Private Limited.
Sharekhan Comtrade Private Limited shall allow clients to review their personal information and the same shall be allowed to be edited provided exchange guidelines relevant to the same are followed.
Sharekhan Comtrade Private Limited shall maintain reasonable security practices and procedures and maintain a comprehensive documented information security programme. In the event of an information security breach, Sharekhan Comtrade Private Limited or a person on its behalf shall be required to demonstrate as and when called upon to do so by the agency mandated under the law, that there have implemented security control measures as per their documented information security programme and information security policies and information security policies that contain managerial, technical, operational and physical security control measures that are commensurate with the information assets being protected with the nature of business.
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Download Client Registration Documents (Rights & Obligations, Risk Disclosure Document, Do's & Don't's) in Vernacular Language :
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