In this article, we will cover
- An Overview: Initial Public Offering or IPO
- The most common terms that are used in the IPO terminology
- Basis of Allotment or Basis of Allocation
An Overview: Initial Public Offering or IPO
According to the latest trends, it has been observed that many companies have issues with information about their IPOs to attract more investors so that profits can be generated. IPO is considered a smart way to earn high returns with fewer risks if one wants to follow a short-term investment path. To get in-depth information related to IPO it is important that one should be well-versed in the glossary. So let us start now!Now the question is what is an IPO? Basically, it is a process in which a private company decides to offer its shares to investors through Initial Public Offerings. By entering an IPO market a company or an organization is interested in generating long-term capital or investments for sustainability.Watch this video to understand, What is IPO and How to Apply It
The most common terms that are used in the IPO terminology are as follows:
Abridged Prospectus
Anchor Investor
Cut Off Price
Bid Lot
ASBA
Basis of Allotment or Basis of Allocation
After receiving all the bids the registrar of the IPO segregates them into numerous categories. They can be qualified institutional buyers, retain investors, non-institutional investors, etc. now for each category the registrar accesses the over and under subscription by comparing the bids with the number of shares available in the market.The further segregation by the authorities of the bid shows results like if they are oversubscribed then the oversubscription ratio to the number of shares applied by the application will be considered. This ratio will help in determining the number of shares that the registrar will allot to the applicants in said situation.This complete set of information is summarized according to the Basis of Allocation of Basis of Allotment document which is published by the registrar for the investors and stock exchange.Book Building
Floor Price
Book Running Lead Manager
Listing Date
Non-Institutional Investor
Qualified Institutional Buyer [QIB]
Retail Individual Investor [RII]
Red Herring Prospectus [RHP]
Bonus Issues
Brokerage
Underwriter
Stockbroker
Oversubscribed/Undersubscribed
Issue Price
At the Money
Auction
Arbitrage Funds
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