Whether you are a stock investor or not, you might have heard the phrase 'A company went public’ either online or in a newspaper advertisement. What does going public mean?
In the simplest terms, ‘going public’ is the process of a private company raising capital by issuing shares for the first time.
In a private company, the number of shareholders is limited by law. However, it can raise capital from people by making them shareholders in the company and converting it into a public limited company.
When a private company approaches people to invest in exchange for a shareholding in the company, it launches the first offer, called an IPO or Initial Public Offering.
You may also want to know the Steps to Invest in an IPO on Groww
To start investing in IPO, one should open a demat or trading account. The necessary documents required for opening a demat account are:
After setting up your trading account, you can apply for IPO online through two methods-
ASBA stands for Application Supported by Blocked Amounts (ASBA). You can apply for IPO on your bank’s website through the online ASBA facility. In addition, you can generally find the ASBA facility in e-services or net banking services options.
Here are the steps to apply for an IPO via the HDFC net banking ASBA facility. The steps are more or less the same across banking platforms-
Step 1: Log in to your net banking account using your customer ID and password.
Step 2: Go to the request tab on the left side of the screen.
Step 3: Scroll down and find the IPO/Rights Issue option.
Step 4: On the next screen, you will see a list of IPOs and rights issues live. Click on ‘Apply’ for the IPO you want to apply for.
Step 5: The next screen will request some information from you. The number of shares you want to bid for, your bid price, and date of birth.
Some details like your name, PAN, bank account number and name, branch, nationality, and residential status will be pre-filled. These details cannot be altered here if need be.
The information asked for under Depository details can also be found in your Consolidated Account Statement (CAS).
Step 6: Once you proceed, you will be asked to confirm the amount to be blocked from your account, agree to necessary terms and conditions, and submit the IPO application
The process of investing in IPO through UPI is straightforward:
Step 1: Log in to your trading account and select the IPO that you want to invest in.
Step 2: Enter the price at which you want to apply for shares and the number of lots.
Step 3: Fill out the application form and provide your UPI ID.
Step 4: Approve the block funds request on the UPI app.
Step 5: It will be Done.
P.S. With your UPI ID, you can invest in upcoming IPOs on Groww. Login via your desktop or your Groww app to apply for the latest IPOs.
You need the following three accounts to invest in an IPO and trade them in the secondary market eventually-
In a Demat Account, shares are stored in an electronic form. It is mandatory to have a Demat account to invest in an IPO.
A Bank Account is required to make payment for the applied shares. This is done via the Application Supported by Blocked Amount (ASBA) facility.
A Trading Account is needed to invest in IPO online. You can open this account with a brokerage firm or a company that offers a stock trading facility.
You need to know many things before investing in IPO. We hope that this article helped answer all your questions about how to invest in IPO.
Remember, while companies try to create a buzz in the markets just before launching an IPO, you must research the company thoroughly before investing. Also, understand the entire process well and fill out the application form correctly to avoid rejection.
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Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.