What is IPO Subscription and What Does It Indicate?

In recent years, we have seen some of the biggest initial public offerings (IPO) hit Dalal street. Along with the IPOs, there has also been a flurry of new investors and traders entering the markets. Investing in an IPO offers great opportunities to investors. One of the several terms that an investor should know is IPO subscription and what it indicates.

What is IPO Subscription?

Companies opt for an IPO to raise funds from the public. After an IPO, a private company becomes a public limited company by selling its shares to the general public in the primary market for the first time. To be an investor in the company, one needs to subscribe to the IPO. IPO subscription refers to the process in which an individual applies for an IPO to invest and purchase shares of the company. The IPO subscription ends with the allotment of the shares and the shares being listed on the stock exchange. IPO Subscription status is also an indicator of how many investors have applied or offered to buy the shares of the company in the IPO. Investors can track the demand status or the subscription status for the IPO in real-time or after each day or at the end of the subscription period.

What is IPO Process?

The IPO process is lengthy and time-consuming. It includes various regulatory approvals, compliance procedures, advertising and marketing, among others. Here are the steps in the IPO process:

• The first step in the IPO process involves the selection of investment bankers and underwriters. A company needs to select a bank which can help them create a prospectus and act as a link or intermediary between the company and the market.
• Next, a company needs to prepare a Draft Red Herring Prospectus (DRHP). This prospectus contains all the details about the business and the purpose of the IPO. This needs to be submitted, verified and approved by the capital market regulator Securities & Exchange Board of India (SEBI). The DRHP does not contain the price or number of shares issued in the IPO.
• Following this, a company needs to advertise, market and raise awareness of the IPO through advertisements and roadshows.
• An updated Red Herring Prospectus is then filed with the stock exchanges in order to get it approved. This prospectus does not include the price of the shares as well.
• The next step involves pricing the IPO. The company can opt for a fixed price issue or set a range in which investors can bid for the shares. This is known as the book-building method. In the case of a company opting for a book-building method, the final prospectus should contain the details of the price band.
• Finally, the IPO is open to the public for subscription, and they can bid for the shares. The shares are allotted to the investors after the subscription period ends.

How to know the IPO Subscription Status?

IPO subscription is a helpful indicator for an investor as it can help one to understand the demand for the shares of the company. IPO subscription figures show the number of shares offered and the number of shares subscribed by each category of investors. It signifies whether the IPO is fully subscribed, undersubscribed or oversubscribed. To check the IPO subscription status, here are the steps one needs to follow:

• Visit the NSE website.
• Go to ‘Market Data’ section and select ‘New Public Issues’.
• Select the IPO from the Current IPO list.
• Click on the Bid Details section.
• In this section, you can check the number of shares offered in the IPO and the number of shares that have been bid for by different categories of investors.

IPO Subscription status can be checked on the BSE website as well.

How to Check IPO Allotment Status?

After applying for an IPO, an investor will often be curious to know if the shares have been allotted to them or not. To their relief, there is an easy way to check the IPO Allotment Status online.

• An investor can visit either the NSE or BSE website or the website of the registrar with which the company has registered the IPO.
• The investor needs to navigate to the IPO section and select the IPO for which they want to check the allotment status.
• The applicant’s PAN Card and Application number need to be submitted.
• The investor can then get to know if the shares have been allotted, partially allotted or not allotted.

Investing in IPOs is a great opportunity to be a part of a company’s growth cycle. With the help of rapid technological developments, applying for an IPO and tracking the IPO subscription and allotment status is easier than ever. Before applying for an IPO, it is important for an investor to go through the prospectus and learn more about the business.

FAQs

What Does IPO subscription status mean?

IPO Subscription status refers to the number of times an IPO has been subscribed.

Will I get Shares if IPO is oversubscribed?

If an IPO is oversubscribed, the registrar conducts a computerized lottery draw to allot the shares.

Does IPO money get refunded?

In the case of non-allotment of shares, the money that has been blocked for the IPO is credited back to the investor’s account.

What happens after IPO is closed?

After the IPO is closed, the shares are allotted to the investors. The shares are also listed on the stock exchanges and can be traded like any other share.

Disclaimer: ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.