Who are IPO Investors?

IPO Investors are the people or institutions who apply to buy shares of the Issuer company when it sells its shares to the public through IPO. These investors play an important role in helping the company raise money from the market. In return, they get a chance to become part owners of the company. IPO Investors can include individual investors, large Financial Institutions and company employees in some cases. Each category of Investors has different rules, limits, and purpose when investing in an IPO.

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What are the types of investors in an IPO?

In IPO, different types of investors participate based on their investment capacity and category defined by SEBI. These investors are grouped to ensure fair allocation and balanced participation from retail to institutional level in Initial public offer.

Following are the types of investors:

1. Individual Investors: Individual Investors are the retail investors include NRIs, and HUF who apply for two lots with application size of upto Rs. 2 lakhs.
2. Non-Institutional Investors (NII): NIIs are individual investors or entities who invest more than ₹2 lakhs in an IPO but are not qualified institutional buyers. They include HNIs, corporates, and trusts.
3. Qualified Institutional Buyers (QIB): These are large, registered financial institutions like mutual funds, banks, and foreign investors who invest professionally in the capital markets.
4. Anchor Investors: Anchor category usually opens one day before the IPO opens. It is a sub-category of QIBs who are allotted shares one day before the IPO opens to to boost investor confidence. They invest minimum of Rs. 2 crores in SME IPO and Rs. 10 crores in Mainboard IPO.
5. Employees: These are the employees of the Issuer company. In some IPOs, shares are reserved for this category, and rules pertaining to employee quota is as follows:
   • Reservation cannot exceed 5% of post-issue capital.
   • No employee can receive an allotment exceeding ₹2 lakhs.
   • In case of under-subscription, allotment can be made beyond ₹2 lakhs, but not exceeding ₹5 lakhs.
6. Shareholders: It might be the case that a subsidiary company is going for IPO and its holding company is already listed or vica versa. In such cases, existing shareholders of the holding company may be offered to buy the shares in the IPO at some discount to the offer price. Shareholders may or may not buy the shares. However, Reservations cannot exceed 10% of the Issue size.

IPO Application

What is an IPO Application? What are the IPO Application rules for different types of investor categories?

IPO Application is the process by which an investor applies to buy shares of a company that is offering its shares to the public for the first time. When a company launches its IPO, investors can place bids for its shares during the open period for the Issue. 

Investors can apply through online platforms using their bank account or through offline methods by submitting a physical form. The application amount is temporarily blocked in the bank account of the investors until the shares are allotted to the investors. The Investors may or may not get the allotment of shares depending on various factors like subscription levels or any other factor. In case of non-allotment, the money is refunded or the share application money gets unblocked.

If shares are allotted to investors, they are directly credited to the investor's Demat account. If not, then the blocked amount is released back to the investors.

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Who can apply in Mainboard IPO and what is the reservation quota for each category of Investors?

These are the categories of investors and their reservation quota in Mainboard IPO:

Who can apply in SME IPO and what is the reservation quota for each category of Investors?

These are the categories of investors and their reservation quota in SME IPO :

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How Individual Investors Apply for an IPO?

A retail investor is one who invests in smaller amounts and is different from institutional investors. Retail category can invest in IPO as per the SEBI ICDR Regulations. They can invest through ASBA, UPI application or by offline IPO application form. Individual Investors can apply online through their demat account or stock broker.

IPO application process for retail investor

• It is mandatory to have a Demat account. 
• Log in to the trading account with a stock broker.
• Select IPO section, select IPO from the IPO list. 
• Enter the number of stocks/lot size to apply
• Select the bid price
• Retail investors can apply up to Rs 2 lakhs (SME IPO) in this category. 
• After selecting the IPO, investors should enter their UPI ID where they will get an UPI mandate (which means a request to block funds from the bank account of the investor for IPO application).
• Investor will get IPO application number after applying for IPO.
• Investor have to approve the UPI mandate before the closing date of the offer.
• After approving mandate, the funds will be blocked by the bank.
• If the shares are allotted, then the amount will be debited from the investor’s account and if shares are not allotted then the bank will unblock the amount.

Detailed Process of SME IPO in India

How to apply as HNI category?

An investor is categorized as High net worth Individual if their liquid assets exceed Rs 10 crores. UHNI (Ultra High Net Worth Individuals) are those whose net worth exceeds Rs 25 crores. When a retail investor wants to invest more than Rs 2,00,000 in IPO, one has to opt for HNI category.

1. Apply to IPO through ASBA form
2. Minimum Investment required Rs 2,00,000

IPO Application process for HNI category:

• Log in to the respective Net Banking Portal.
• Click on ‘IPO Application’.
• Select the HNI category. Enter the number of lots and the price for bid. The total bid amount should not be less than Rs 2,00,000.
• To be noted that HNI bid cannot be placed at the cut-off bid price option. The application amount is blocked till the final allotment. 
• The blocked amount is debited from the account as per the IPO allotment.

IPO Eligibility Checklist

IPO Application – UPI or ASBA

What is IPO application form? 

An IPO application form is a two-page document. The first page collects details about the applicant, the offer, and the counterparty, while the second page provides instructions. IPO Application from is needed when IPO is applied offline.

For online applications, the broker or the bank sends the information directly to the stock exchange using an API.

Each form has a unique application number and the intermediary's stamp or code. One can easily download IPO application forms as PDF from the BSE and NSE websites.

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How to apply for IPO through UPI?

UPI method of IPO Application is a convenient and secured way of IPO Application introduced by SEBI. Here are steps that help investors to understand the process of applying through UPI for IPO.

1. Investors who want to apply for an IPO is required to open a Demat account with any broker or bank.
2. Log-in to the demat account with the credentials required.
3. Select the IPO in which you are willing to apply.
4. Enter details on the number of shares to purchase, choose the cut-off price (in case of book building method)
5. Approve the UPI request received after applying for shares. The money required to buy shares will be blocked in your bank account till the allotment.
6. If allotment is received, then the amount will be debited from your account and shares will be credited to Demat account
7. In case of IPO Allotment, shares are credited to the demat account. In case of non- allotment, the funds are unblocked.

What is the meaning of ASBA (Application Supported by Blocked Amount)?

Application Supported by Blocked Amount (ASBA) is a process where an investor submits an application that allows a Self-Certified Syndicate Bank (SCSB) to block a certain amount of money in their Savings or Current Account (not in overdraft or loan accounts) from which they have applied for IPO application. 

This blocked money is reserved for purchasing shares in an IPO until the final allotment is decided, or until the application is withdrawn or rejected.

ASBA is another option available for all public Issues, including debt and Rights Issue. Investors can use ASBA for both Initial Public Offers (IPOs) and Follow-on Public Offers (FPOs). 

If an investor applies through ASBA, the money for IPO application will be debited only in case of IPO allotment. In case of non- allotment, the amount would be unblocked.

Role of IPO Advisors in IPO

What are the Benefits of ASBA application by investors?

• It is very easy and convenient way for investors to apply for an IPO.

• The amount is debited when allotment of IPO is received else it got unblocked.
• In this method of application there is no need to approve any mandate for payment like UPI method. 
• There are no extra charges for applying through ASBA facility.

How to apply for IPO through ASBA? (Make these steps in Picture)

Here's how you can apply using ASBA step by step:

• Login to your Net Banking account
• Find the IPO section and look for the option like ASBA under the service menu.
• Choose the IPO from the list in which you want to apply.
• Enter your details like- number of shares, Bid price, PAN card details and Demat account details.
• Confirm and submit the IPO application. Your bank will block the IPO amount in your bank account.
• On the Date of Allotment, if you receive the allotment then the amount will be debited form your account and shares will be credited to your demat account.
• In case of non- allotment, the amount will be refunded by the bank within 48 hours.

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What are the IPO Application timings, and do banks have different cut off times on the last day?

An IPO remains open for at least 3 days to a maximum of 10 days. During this period, stock exchanges accept IPO applications from 10:00 AM to 5:00 PM on days when the IPO is open for subscription. Investors can also apply after working hours or on holidays but the stock exchange will process the application on working days at working hours.

Most of the banks and brokers allow investors to apply for an IPO application any time during the day when the IPO is open for subscription. But the application will be sent to the Stock exchange after 10:00 AM the next working day.

On the last day of the IPO, banks and brokers may have different cut-off times because they need to process applications before 5:00 PM.

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IPO Application Timings:

IPO Application timing in India is generally 10:00 AM to 5:00 PM on business days during the IPO subscription period.

How to modify IPO Application?

If you want to change your IPO application after submitting it, investors can change or revise their bid amount or quantity. Individual investors may adjust their bids by either upsizing or downsizing their bids. QIBs and NIIs are only allowed to upsized their bids so they can only increase the bid size or bid price.

Steps to Modify IPO bids online:

• Login to your broker’s platform or your net banking app
• Go to the IPO section where your active application is listed
• Choose the IPO you have already applied for.
• Click on the option to edit or modify your bid.
• Change the number of shares or the price as per your new preference.
• Click on update or confirm to save the changes.
• Approve the new UPI mandate request if you have applied through UPI.
• In case you have applied through ASBA application, after upsizing the Bid then extra amount will be blocked form the account. In case of downsizing the Bid, the extra amount will be released from bank account.

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How to cancel the IPO Application?

Investors can cancel/delete their IPO application through ASBA bank account or broker’s website before the IPO closing date. Once canceled, the blocked amount will be automatically released by the bank after confirmation. 

Steps for IPO Bid Cancellation through ASBA

• Login to your broker’s platform or your net banking app

• Go to the IPO section where your active application is listed

• Choose the IPO you have already applied for.

• Click on the option to cancel your bid.

• After that your IPO application is cancelled and you will get your refund within 48 hours.

What is the cut off time for applying on the last day of IPO?

The cut-off time is the final time on the last day of IPO when investors can apply for shares. While the stock exchanges (NSE and BSE) accepts IPO bids from 10:00 AM to 5:00 PM. It is generally observed that most banks and brokers stop accepting applications earlier, usually between 2:00 PM to 4:00 PM depends on their internal process.

This time is important because many retail investors prefer to apply on the last day after checking the subscription status of big investors like HNIs and QIBs. Also, the cut-off time can vary between banks. 

The cut-off time applies only on the last day of the IPO. On other days, applications can be submitted at any time during the IPO window. Sometimes, the exchange may also extend the bidding time on the last day for certain investor categories.

How long does an IPO remain open?

An IPO is typically open for a minimum 3 days and a maximum 10 days as per SEBI ICDR regulations. An IPO has to be applied for within the IPO open date and the IPO close date. 

How to Check IPO Application Status/IPO Allotment status?

• If you have applied online through a broker, you can check the status on their website or mobile app. Go to the IPO section and choose the IPO applied for the status.
• If you have applied offline, then you need to contact your broker or bank to get the latest updates on your IPO application.

When you check your IPO application status, you may come across the following updates:

• Application is under process
• Application has been successfully submitted
• UPI mandate is pending for approval
• Payment confirmation by the bank
• Bid has been submitted to the Stock exchange

Investors can check their IPO bid status on the website of NSE and BSE by entering the details of the PAN number and Application Number.

Where to check IPO Application Status on NSE?

NSE (National Stock Exchange) provides a tool where investors can check their IPO application details and IPO allotment status. To use it, you need to register one-time using your PAN number. After that, you can easily view your IPO application details linked to that PAN.

Where to check IPO Application Status on BSE?

BSE (Bombay Stock Exchange) also has an online option to track your IPO application status. To check it, go to the BSE IPO application status page and:

• Select the IPO name
• Enter your application number or PAN
• Tick the box that says “I’m not a robot.”
• Click on submit