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With the stock markets swinging into a bull-run and with the investor sentiment being at all-time-high, investing in an Initial-Public-Offering (IPO) seems like the top priority for every investor. With over 35 IPOs out in 2016 and several more in the pipeline for 2017, we list down the procedure to apply for an IPO for all first-time investors, and a few takeaways they should keep in mind.

The Procedure

An initial public offering (IPO) is the first time that the stock of a private company is offered to the public. Post January 01, 2016, it is mandatory to apply for all IPOs through the ASBA process.

ASBA means “Application Supported by Blocked Amount”.

•  Under ASBA facility, investors can apply in any public/ rights issues by using their bank account.An investor should submit the ASBA form (available at the designated branches of the banks acting as Syndicate Bank) after filling the details mentioned below and give instructions to block the amount in their account.
  • Name of the applicant
  • PAN number
  • Demat account number
  • Bid quantity, bid price and other relevant details

•  If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.
• In turn, the bank will upload the details of the application in the bidding platform. Investors shall ensure that the details that are filled in the ASBA form are correct otherwise the form is liable to be rejected. The investor shall be responsible for maintaining sufficient funds equivalent to the IPO application amount in his/her account and for furnishing correct & accurate details in the ASBA application form of the IPO.
• The investor can generate e-form from NSE website for any issue. The same link is also available on BRLM’s (Book running lead manager) website also.
• An investor can also apply for an IPO online – by going through the requisite links on the online trading platform of the syndicate bank. It is essential to keep in mind that the IPO Application is only for individuals and applications cannot be made on behalf of a Corporate, HUF, Trust, etc. Also a hold will be marked on the total amount, at the highest price bid by the applicant and the Application money will remain blocked up to the finalization on the basis of allotment.

 Keep the following procedure in mind while applying for the next IPO, till then …

Happy Investing!

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