What are the Steps Involved in the IPO Process?

The 10 key steps of the IPO process that a company follow for a listing are as follows:

 

Step 1: Primary Planning

The first step in the IPO process is proper primary planning done by the company. The company's management and key stakeholders prepare a self-assessment before public offering. This involves evaluating the company's financials, growth potential, market conditions, and regulatory compliance requirements.

 

Step 2: Selecting Underwriters

The company manages the planning process with the help of underwriters or investment banks. The major role of underwriters are as follows:

• Underwriters work closely with the company to determine the value of the share, taking into consideration company profitability, market perception, cash flows, asset valuation, etc.
• They plan the IPO process by taking into account factors like choosing the right fundraising target, the securities to be issued, and more.

 

Step 3: Conducting Due Diligence

The company undergoes a due diligence process. It includes a thorough analysis of financial accounts, legal and regulatory compliance, corporate governance practices, and potential risks. Communicating all vital information to prospective investors enables them to decide whether or not to go for an IPO subscribe.

 

Step 4: Drafting the Red Herring Prospectus

The Red Herring Prospectus (RHP) is prepared by the company in consultation with its legal and financial experts. This document contains in-depth information on the firm, its business plan, financials, risk factors, industry overview, and anticipated use of IPO money raised. This document also serves as a promotion tool to get investors.

 

Step 5: SEBI Filings and Approval

The RHP is submitted to SEBI along with the Registration Statement. The SEBI then scrutinizes whether the company has disclosed every aspect the potential investors need to know. After evaluating the filings, SEBI issues approval for the IPO.

 

Step 6: Roadshow and Investor Presentations

The company then goes on a roadshow to promote the IPO and urge potential investors to IPO subscribe, which lasts for about 2 weeks. This process includes presentations and meetings with institutional investors, analysts, and interested parties. The purpose of the roadshow is to promote positive interest and serve the query of 'how to increase chances of IPO allotment' for investors.

 

Step 7: Pricing and Allocation

The company determines the ultimate offering price and quantity of shares to be offered using the following methods:

• Fixed Price Method: The company and underwriters work together to fix the price for the shares considering investor response and prevailing market circumstances.
• Book Building Method: Potential investors can bid for shares within a price range set by the company and underwriter.

 

Step 8: IPO Subscription and Allotment

The IPO subscribe begins, and investors are allowed to purchase the offered shares. If you are wondering 'how to increase chances of IPO allotment', this is the time period when you can complete your due diligence and invest. You'll receive shares within 10 days based on the allocation criteria.

 

Step 9: Listing on Stock Exchanges

The company's shares are listed on the stock exchange after the allocation and can be traded publicly. Depending on the company's choices and legal restrictions, the listing may take place on various stock exchanges.

 

Step 10: Post-IPO Compliance

After listing, the company must continue to meet ongoing SEBI compliance requirements. It includes periodic financial reporting, transparency requirements, and corporate governance standards

 

Conclusion

An IPO offers a chance for companies to raise funds and investors to acquire shares of the company. Before going public, companies undergo rigorous evaluations set by SEBI. Similarly, investors must perform their due diligence before investing. If you are looking forward to investing in upcoming IPOs in India, open a demat account with Almondz Trading.