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Financial Services > Knowledge Center > Investment > Investment FAQs – IPO

Investment FAQs – IPO
What are IPOs?

Initial Public Offering (IPO) is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public.


Some of the reasons why companies go for an IPO is as follows

  • Additional Capital resources for funding of projects/expansion plans.

  • Dilution of existing promoters share holding.

  • Listing enhances corporate image thus providing visibility.
What are the two types of IPO?

There are two types of IPO

“Book Building” means a process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and built up and the price of the security is assessed on the basis of the bids obtained for the quantum of securities offered for subscription by the issuer. This method provides an opportunity to the market to discover the price for securities.

In case of a fixed price issue the issue price is fixed.
How to apply in IPO’s?

To apply in an IPO, one needs to have a demat account.

PAN copy is required in case the application amount is equivalent or more then Rs.50,000/-.

Basic details such as name of the investor, address, bank details and the contact details need to be provided.
Is it compulsory to have a demat account?
As per the regulation any public issue of size in excess of Rs.10 crore are to be made compulsory in demat mode.
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