Archives September 2022

PROCESS FOR APPLYING IN AN IPO THROUGH ICICI BANK

Step 1: Login to your Net Banking Account.

Step 2: Click on ‘Invest Online’ under the Investments & Insurance tab.

Step 3: Click on ‘Invest Now’ in the Online IPO, Right Issues & Call Money column.

Step 4: You would get all the open IPOs for application. Click on ‘Apply’ button to choose the IPO.

Step 5: Fill in the bank details as required and proceed for the further application.

PROCESS FOR APPLYING IN AN IPO THROUGH SBI BANK

Step 1: Login to the Net Banking of SBI through the login credentials along with generating High Security Password sent on the respective mobile number.
Step 2: Click on ‘Demat Services and ASBA’ tab under “e-Services”.

Step 3: Under ASBA Services, click on “IPO”.

Step 4: List of available IPOs will appear. You can select any IPO as per your choice.

PROCESS FOR APPLYING IN AN IPO THROUGH HDFC BANK

Step 1: Login to HDFC Net Banking and click on ‘Request’ Tab on the left side.

Step 2: Select ‘IPO/Right Issue New’ under Request tab.

Step 3: Select the option for IPO Issue and choose the IPO you wish to apply for.

PROCESS FOR APPLYING IN AN IPO THROUGH IDBI BANK

Step 1: Login to Net Banking of IDBI Bank.

Step 2: Click on “IPO” on the left side under the Investments tab.

Step 3: Now, click on “ASBA IPO Online”.

Step 4: You will find the list of IPOs which are open on that date. Select the IPO of your choice and fill out the application providing the details of the quantity and amount that you want to invest.

PROCESS FOR APPLYING IN AN IPO THROUGH AXIS BANK

Step 1: Login to Net Banking of Axis Bank. Go to Investments>IPO.

Step 2: Go to “Apply for Equity IPO” and you will get all the available options for the IPO. Choose any IPO according to your choice and fill the required details as requested in the application form.

PROCESS FOR APPLYING IN AN IPO THROUGH INDIAN BANK

Step 1: Login to Net banking of Indian Bank. Click on ‘ASBA’ under “Value Added Services” tab.

Step 2: Click on “Apply IPO/FPO”. Fill in the details and Generate Application Number for the same.

Step 3: Fill in the required details for application.

Step 4: Enter the details regarding the Quantity and Value for the Bid and complete the process by entering the Transaction Password.

Initial Public Offering (IPO) is a process by which a privately held company gets listed on the stock exchange and sells its shares to investors. There are several categories of investors in IPO application process. You can apply through more than one category to maximize the chances of allotment based on the eligibility criteria.

RETAIL INDIVIDUAL INVESTORS

• This category includes Resident Indian Individuals, Non-resident Indians (NRIs) and Hindu Undivided Families (HUFs)
• The minimum allocation under the retail quota is 35%.
• SEBI has decreed that if the issue is oversubscribed, subject to availability, all retail investors be allotted at least one lot of shares. A lottery system is used to allocate IPO shares to the public when one lot cannot be allocated to each investor.

NON INSTITUIONAL INVESTORS (includes HNI)

Institutional Bidders (NII) category includes IPO application by High Net-worth Individual (HNI) investors. Other than HNI investors, the NII reserved portion also includes:

• NRIs
• HUFs
• Companies
• FPIs, and
• Trusts.

NIIs are further divided into two categories:

• s-NII: NII investors who bid for shares between Rs. 2 lakhs and Rs. 10 lakhs are considered as Small NII category. The 1/3rd of NII category shares are taken for this sub-category. This subcategory is also called Small HNI (s-HNI).
• b-NII: NII investors who bid for shares worth more than Rs 10 Lakhs are considered as Big NII category. The 2/3rd of NII category shares are taken for this sub-category. This subcategory is also called Big HNI (b-HNI).

HIGH NETWORTH INDIVIDUALS(HNI)

Non-Individual Investors, also known as HNIs are high-value applications and therefore are treated differently from retail applications.

• HNI category allows investors to apply for more than Rs 2 lakh in an IPO.
• HNI applications cannot be cancelled.
• Modification of bids can be increased but cannot be reduced.
• HNI investors can’t apply at the cut-off price. The applicants have to mention the exact price they are willing to pay for the IPO.

QUALIFIED INSTITUTIONAL BIDDERS (QIBs):

• Commercial banks, public financial institutions, mutual fund houses and Foreign Portfolio Investors that are registered with SEBI fall in this category.
• 50% of the total offer price is reserved for Qualified Institutional Bidders.
• Investors from this category cannot bid at the cut-off price.
• QIB’s are prohibited by SEBI guidelines to withdraw their bids after the close of the IPOs.

Underwriters try to sell large sums of IPO shares to qualified investors/bankers at a thriving price before the start of the listing of IPO. To meet the targeted capital of any company, underwriters sell a huge amount of shares to QIBs. SEBI mandates that institutional investors shall sign a lock–up agreement for at least 90 days to guarantee minimal volatility during the IPO process. QIBs are particularly significant for a company launching an IPO. That’s because IPO shares are offered by the underwriters to the QIBs before the price discovery in the share market takes place. There would be lesser number of shares available to the general public if QIBs buy more shares. This would result in increased share prices. This scenario is great for a company because they want to raise as much as capital as possible.

However, SEBI has laid down rules to ensure that companies do not manipulate the IPO valuations. Because of this, SEBI doesn’t allow the companies to allocate more than 50% shares to Qualified Institutional Bidders (QIBs).

ANCHOR INVESTORS

This is a part of QIB making an application of more than Rs.10 crores in a book building issue. This category includes

• Resident Indian Individuals, non-resident Indians (NRIs), HUFs, companies, trusts, science institutions, corporate bodies and societies.
• Investors under this category cannot bid at the cut-off price.
• Maximum 60% of the QIB category can be allocated to the Anchor Investors.
• Anchor Investor Offer Price is decided separately.
• No merchant banker, promoter or their relatives can apply for shares under the anchor investor category.

POINTS TO BE REMEMBERED:

• UPI transaction limit for the payment of IPO has been increased from Rs.2 Lakhs to Rs.5 Lakhs for the investors with effect from 1^st May, 2021.
• There is a time limitation for bidding. Applications are allowed till 3:45 PM IST only. Bids placed after 3:45 PM on Day 1 and Day 2 will be pushed as AMO orders. On Day 3, bids placed after 3:45 PM will be rejected by the exchange automatically but it can vary depending upon the policies of the bank.
• IPO allotment is done on a lottery or proportionate basis depending on the status of oversubscription in the segment.

KEY DIFFERENCES

PARTICULARS	RII	NII/HNI	QII
ELIGIBILITY	Resident Indian individuals and NRIs applying for shares not exceed Rs 2 Lakh in value.	Resident Indian individuals and NRIs applying for shares exceed Rs 2 Lakh in value.	Commercial banks, public financial institutions, mutual fund houses and Foreign Portfolio Investors that are registered with SEBI (More than Rs. 2 Lakhs)
SHARES AVAILABLE	35% of the Offer	15% of the Offer.	50% of the Offer.
BASIS OF ALLOTMENT	Lottery	Proportionate	Proportionate
CUT-OFF PRICE	Can invest at the cut-off price.	Cannot invest at the cut-off price.	Cannot invest at the cut-off price
BIDS	Retail investors are allowed to withdraw or lower the bids	Cannot withdraw or lower the bids.	Cannot withdraw or lower the bids.