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    IPO

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    Aynalem Kasa

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    © All Rights Reserved
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    IPO

    Uploaded by

    Aynalem Kasa
    1 views12 pages

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    1 views12 pages

    IPO

    Uploaded by

    Aynalem Kasa

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    10

    IPO Related Terms


    Everyone Must Know
    1) IPO
    An IPO stands for Initial Public Offering.

    It is the process through which a privately held


    company offers its shares to the public for the
    first time to raise capital from external
    investors by selling ownership stakes in the
    company.
    2) Prospectus
    A formal document filed with the Securities
    and Exchange Board of India (SEBI) provides
    details about the company, its financials,
    risks, and other relevant information for
    potential investors considering buying shares
    in the IPO.
    3) DRHP
    DRHP stands for Draft Red Herring Prospectus

    It is an offer document issued by the company


    with SEBI and the Registrar of Companies
    before the IPO process.

    DRHP contains detailed information about the


    company, its business operations, financial
    performance, management, the purpose of
    the IPO, and other relevant information
    required by potential investors.
    4) Anchor Investors
    Anchor investors are institutional investors
    who commit to subscribing to a significant
    portion of shares in an initial public offering
    (IPO) before the offering opens to the public

    These investors are usually large financial


    institutions, mutual funds, or other
    institutional investors.
    5) Bid Lot
    Every investor applying to an IPO has to apply
    to a minimum number of shares called a ‘Lot’.

    These ‘Lots’ and the number of shares within


    them are pre-determined by the company.
    Investors can apply to multiple lots, too.
    6) Fixed Price/Book Building:
    A company can issue an IPO through two
    methods: Fixed price and Book Building.
    Under the fixed price, the company announces
    the full price of its IPO beforehand.

    Under the Book Building method, the company


    sets a price range and finalizes the price after
    calculating the investor demand.
    7) Floor Price
    The floor price of an IPO is the minimum bid
    price you can choose while applying to an
    IPO.

    It is the lower price limit of the price band


    chosen by a company.
    8) Issue Price
    It is the price at which the shares are finally
    allotted to the applications after the book
    building IPO issue closes.

    The issue price is different for each investor


    category.
    9) Cut Off Price

    This is the lowest price at which the shares


    are allotted to investors and is generally
    reserved for retail investors.

    If you bid a higher price than the cut-off


    price, the balance is refunded to you.
    10) Oversubscribed/undersubscribed

    If the company receives more applications


    than the offered shares, the issue is known to
    have been oversubscribed.

    If the issue receives fewer applications than


    the offered shares, the IPO issue is referred to
    as undersubscribed.
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