Overview of IPO
Every company needs financing to start the business operations. Even after pumping in huge investments, the capital for which are raised from sources, the companies realize that they need external financing in order to retain the business and help it flourish further, and that’s when they usually decide to go to public. So in order to raise an additional capital to meet business requirements, the company uses its equity instruments, which is where IPO comes into play.
An IPO or Initial Public Offering is the practice in which a private company can go public by offering its first sale stocks to general investors. It’s the primary financial market where the company which sell its shares for the first time is known as an issuer. After an IPO is closed, the company’s shares are traded in the open market. A new IPO is closed and steps into creating fresh equity shares for trading in secondary market.
How IPO Works?
In most of the companies the initial funding comes from the owner himself, small business loans and venture capitalists. But, there are times when these funds are not enough to meet the expenses or at times the limitations in the funds tends to hamper the growth of the company. So in instances like these, companies go public by selling their shares to the new investors and generating funds.
To turn a privately owned company into public, you need to navigate from the lengthy process. As per the Corporate Finance Institute, there are five steps in the IPO process.
- Select lead Investment bank
- Due Diligence
Once you successfully complete the process, you can share the ownership or stocks to general public. The entire process of listing a company and investment via IPO is regulated by the SEBI (Securities and Exchange Board of India). Every company that wishes to get listed has to follow following process –
- Registration – Only a company registered with SEBI, can submit the documents (known as DRHP) to SEBI for an approval.
- Filing DRHP – While awaiting the approval company many prepare prospectus by mentioning that the approval is awaiting.
- Fixing Price & Quantity – Upon approval company decides the price of a share and quantity of the shares it plans to issue.
- Deciding between type of Issues – Mainly two types of issues are there, Fixed Price & Book Building. In Fixed Price issue, company has already decided the price of the share whereas in Book Building, the company gives a range of price. Applicants then need to bid within this price range.
- Application & allotment – When the IPOs are open for public, investors can submit applications as per their interest for buying the shares. Upon receipt of subscription, the company proceeds to allot shares to the applicants.
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How to apply for IPO online?
- Choose an IPO that you would like to apply for
- Have required accounts – You need to have a Demat account/trading account and a bank account.
- Process for the payment – when you apply for an IPO you have to back it up with funds. Mainly two types of payment options are available these days – ASBA & UPI.
You can choose to apply through any traditional broker Or discount brokers. A lot of investors these days prefer going through the discount brokers since they offer simplified platforms and the process takes barely any time. For instance in case of 5paisa, a leading discount broker in the country, you can easily download 5paisa Trading app and apply for IPOs online. They have elaborated their IPO Application process in detail on their Website and Youtube Channel too.
Now next big questions is to be prepared for the upcoming IPOs in 2020. So here is the list of current and upcoming IPOs. About 40-50 companies are expected to launch IPOs this year. These are enlisted in the upcoming IPOs 2020 calendar.
Some of the big IPOs to keep an eye for includes:
- Equitas Small Finance – Equitas Small Finance is a microfinance company launched in 2007. The issue size of the IPO will be Rs 1000 crores, in which Rs. 800 will be a fresh issue.
- Burger King India Ltd – One of the fastest growing international QSR chains in India, Burger King India Ltd is expected to open their IPO in October 2020. The Issue size is going to be ~1000cr.
- Kalyan Jewellers – One of the leading Kerala-based retail jewellery firm Kalyan Jewellers is likely to announce their IPO of ~1700cr. The issue is expected to open in October 2020.
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Apart from these biggest IPOs there will be many more IPOs getting listed at BSE. Keep your eyes on these upcoming IPOs if you wish to apply for.
- UTI Asset Management Company -UTI will be the third AMC list on Indian Stock Exchange and might turn out to be the best in the list of upcoming IPO 2020. The size of the IPO is estimated around ₹2,159 crores. Issue price will range between ₹552-554 and the IPO opens on 29th Sep, 2020 and Closes on 1st 2020.
- Mazagon Dock Shipbuilders Ltd- India’s leading defence public sector undertaking shipyard under the Ministry of Defence is coming up with it’s initial public offering (IPO) of 30,599,017 equity shares of the face value of ₹10 aggregating up to ₹443.69 Crores. Issue price range is going to be Rs.135 to 145. The IPO opens on 29th Sept, 2020 and Closes on 1st 2020.
- Likhitha Infrastructure Ltd IPO- is an oil and gas pipeline infrastructure service provider in India. The company is offering IPO worth Rs. 61.20Cr which opens on 29 Sept and closes on 1st Oct. As compared to the other popular IPOs it is going to be a small IPO in size of Rs. 61.20Cr. Other small IPOs include Sigma Solve Limited, AAA Technologies Limited, G M Polyplast Limited, Atal Realtech Ltd, and Veer Global Infraconstruction Limited that are expected to hit the market in the end of September.
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We hope this comprehensive guide on the list of the current IPOs proves helpful to you. This year can prove to be quite profitable to the investors provided they make investments in the right direction.
Happy Investing 🙂