Last Updated on May 25, 2022 by Neera Bhardwaj
In 2021, one of the most popular online payments platforms – Paytm – announced its IPO. Not only did this become the biggest announcement of the year, but the IPO also ended up as the largest in India. It raised a total of Rs. 18,300 cr. 2021 witnessed other popular companies like Zomato and Nykaa announce their IPOs too. And even though 2022 has just begun, the news is already buzzing with more.
IPO is short for Initial Public Offering. It is the process of making shares of a private company available to the public via new stocks. It is what we mean when we say that a company is “going public”. But how exactly does it work, and how can we track the IPO allotment status?
Here’s a quick guide on IPO allotment status.
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When do companies hold IPOs?
Before an IPO, a company is a private entity supported by a small number of private investors such as angel investors or venture capitalists. IPOs open the company’s shares to a large number of public investors. They are a means to raise additional capital for growth, expansion and other company needs.
To hold an IPO, a company must first meet specific requirements set by the Securities and Exchange Board of India (SEBI). Upon achieving eligibility, a company has to first advertise its intent to go public. The valuation of IPO shares of a company is calculated through share underwriting. The entire process is facilitated and overseen by investment banks.
IPO allotment process
From the time a company announces going public to the time that the new stock issuance is bought, multiple steps ensue. The IPO allotment is one of these many steps in the entire gambit.
The period when every investor gets a chance to place an order for the IPO is called an allotment period. This period is open from the time of the announcement to the closing of the IPO.
The IPO allotment stage is segmented into a few steps as well. These are:
- Paperwork and documentation for the proposed IPO.
- For a limited period known as the book-building period, the documents are made available to prospective investors.
- Based on subscriptions in the book-building period, the company decides the number of new shares it will issue for the IPO.
- Once decided, the IPO-issuing company announces the number of shares it intends to sell and authorises brokerage houses.
- After the book-building period ends, the IPO allotment process moves to the trading stage when the actual transaction of shares takes place.
Since each application is only open for a few days, you must check for sufficient funds and correct net-banking credentials beforehand.
When placing the bid, you have to provide details like your name, contact information, PAN, Demat account number, and the number of shares you want to purchase.
Checking IPO allotment status
You can check the status of your IPO allotment in a few simple steps, online or offline. You can do this via the IPO registrar, i.e, Link Intime or KFintech. The details required are the same as the information you furnish at the bidding time.
The IPO allotment information becomes available after the register finalises the allotments across all the investors. In India, this process takes a week after the closing of the IPO. Once this is over, you can access the information with the same IPO name that you applied with. Moreover, you will also receive updates via email and SMS from the authorities.
To check the status of the IPO allotment online, you can follow these steps:
- Log in to the IPO allotment link on the registrar website
- Select the IPO name
- Enter the PAN, Application number, or Demat Account Number
- Upon clicking on search, the IPO allotment will be visible
Investing in an IPO – is it safe?
If you are wondering whether it is safe to invest in an IPO or not, you are not alone. The financial market is perennially volatile, and no one can guarantee returns.
Having said that, it is important to remember that the decision to go public is a massive one. Any company arrives at this decision after a lot of consideration and many months of consultation with experts.
It’s often a good practice to set a limit when investing in an IPO. This is because trading stocks can somewhat be like gambling. Understand your risk appetite and only then think of applying to IPOs.
IPOs and their entire process may not be as straightforward as it appears. IPO allotments are based on subscriptions received and subsequent allotment which is similar to a lottery. There is no guarantee of you get a slot allotted for a particular IPO. So, when you apply for an IPO, be prepared for any scenario. Do remember to consult your financial advisor before deciding to invest in any IPO or stock.