How to Bid in IPO?

Initial Public Offering abbreviated as IPO is the first sale of a company’s share available to the public. There is IPO bidding on offered stocks and the stocks are allocated to successful bidders. The revenue generated is used by the company for its growth and expansion. Investors can bid for the upcoming IPO as it is a lucrative investment asset for wealth creation over a long period of time. The IPO is open for a period of 3-21 days to the public. This article will take you through the complete process of IPO bidding.

The first-time IPO investors are often clueless about the process of IPO bidding. It is recommended to do thorough research before bidding on a particular IPO. Just like a stock market investment, IPO bid timing is crucial when investing in IPO. You can bid for IPO through both online and offline methods. However, it is mandatory to have a Demat account to conduct both transactions. Here is a comprehensive process of IPO bidding:

1. Online IPO BIdding

  • To begin with, you need to have ID proof, address proof, and other relevant documents in place.
  • You need to open a Demat account with a stockbroker and ensure that you have sufficient funds in your bank account. Also, confirm that an IPO is open to the retail investor.
  • You have to sign and submit the ASBA form to the broker. Application Supported by Blocked Account (ASBA) is a facility which permits banks to block money in your bank account and debit the amount once the shares are allocated.
  • The key advantage of ASBA is that you continue to receive interest in the blocked amount. Unlike brokerages, your money does not get locked.
  • You can even withdraw the IPO bidding by getting in touch with your broker.
  • All brokers have an IPO page where you can select the IPO issue you want to apply to.
  • You can either invest at a cutoff price or make bids. You can make a maximum of 3 bids at once.
  • Enter your Demat account number and bid for the number of stocks you wish to purchase. Fill in other required details and submit the application.
  • Once you submit the application, you receive details such as the IPO application number and other transaction details.
  • If the shares are allocated, they automatically get deposited in your Demat account.
  • If the shares are not allocated, you will receive a refund in your bank account.

2. Offline IPO Bidding

  • You can place an order by visiting your bank/stockbroker or getting in touch with your relationship manager.
  • Fill in the application form and specify the number of stocks you wish to purchase.
  • Mention the 16-digit Demat account number, the bid price, and attach the cheque for payment.
  • Shares will be automatically deposited in your Demat account and you can view them in your portfolio. Hence, your IPO subscription is completed.
  • You may then choose to keep the shares or trade them for profits.

For an IPO of a prominent company, the demand for the stocks often exceeds the quantity available to the public. In such a case, you might get a lesser number of shares than what you initially bid for. There might also be a possibility that you might not get any share. Hence, the bank refunds your blocked amount.

  • What is the next step if all the IPO shares are allocated to me?
  • In IPO bidding, if you have received full allotment, all the shares are credited to your Demat account. Moreover, you will also receive a Confirmatory Allotment Note (CAN) from a particular company after the IPO is closed.

  • Can I apply for a particular IPO twice?
  • No, you cannot make multiple applications for a particular IPO. You can apply it on behalf of your family member through different credentials.

  • Is ASBA mandatory for IPO bidding?
  • Yes, according to SEBI, filing an Application Supported by Blocked Amount (ASBA) form is mandatory.

  • How to check the IPO bidding status?
  • To check the IPO bidding status, you can visit the BSE website and fill in relevant details such as issue type, issue name, application no, PAN card no, and click on the search button.

  • Can I revise my IPO application?
  • Yes, an investor can revise the application details such as the number of shares and bidding price during the process of IPO bidding. However, this can only be done if the IPO is open for subscription.

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