There are many ways through which a company raises funds; one is through an initial public offering (IPO). In this, companies raise equity funding by issuing shares to the public at a specific share price.
As an investor, you can invest in these IPOs to obtain returns. Continue reading to learn more about IPOs and how you can invest in them!
Table of Contents
What is an IPO?
IPO is the procedure through which a private company issues its shares to the general public on the stock exchange. By releasing these shares to the public, the issuing company also becomes a public company with the obligation of releasing its financial records to the public.
It can be a win-win situation for both companies and investors because companies can raise capital by distributing their shares and utilising it for growth or expansion activities, while investors can own a piece of the company and obtain dividends and returns when the company prospers!
You can upgrade your knowledge about these IPOs and stock exchanges by taking the best stock market certification courses from Upsurge.club.
How to Invest in IPOs?
You can easily apply for IPOs online by following a few simple steps listed below.
1. Opening accounts
To be eligible to invest in an IPO, you will need a trading account and a demat account linked to your bank account. If you do not have any of these accounts, you can apply for one online.
2. Choose the IPO
Every company offers a window of dates in which you can subscribe to their shares through IPOs. Therefore, the most critical step is to analyse whether investing in a company’s IPO would be beneficial or not.
You can read through the company’s prospectus, analyse its financial health, and assess market perception before deciding whether you should purchase its IPO.
3. Submit the IPO application
You can apply for IPOs through a third-party broker app or your bank’s demat account. During an initial offering, shares are offered in lots, meaning you can buy shares only in a multiple of a certain number.
A price bid range is also specified, and you can bid for these shares for any price within this range. Once you submit the application and submit the OTP, the amount is directly debited from your bank account.
Regardless of the number of lots you apply for, you usually get a lower number of lots than you applied for.
4. Allotment of Shares
Once you have applied for the IPO, you will receive information about the allotment or non-allotment of shares after the window period. If the shares are not allotted, the money will be refunded to your bank account.
However, if the shares are allotted, they get reflected in your demat account on the allotment day. You can then sell or buy more of these shares once they are listed on the stock exchanges.
Conclusion
There are multiple factors that you should take into account to decide whether you should invest in a company’s IPO. You can also check out a few certified courses to learn stock market investing on Upsurge.club and deeply understand the stock market dynamics. Hopefully, this blog has helped you better understand the world of IPOs!
- About the Author
- Latest Posts
Whether she is researching the latest trends in home decor, life-changing destination getaways, or the best way to maintain your finances, Dewey takes pride in leaving no stone unturned. She is passionate about distilling and delivering high-quality information that you can use to upgrade your life.
