Qualified institutional buyersQIB portion which comprises
- Mutual funds
- Financial Institutions
- Institutional Investors
Non-Institutional InvestorsNIIs comprise
- Individuals other than retail investors
Retail Individual Investors
Retail individual investors can invest in Initial Public Offerings.
01 Choose the IPO That you Want to Invest in
We generally know the latest IPO calendar of a particular year beforehand. Investing in an IPO requires research as we may not have a lot of historical data on the performance, management and other crucial fundamental factors.
This is when we compare that company to a listed company. Hence, determining the IPO that you want to invest in is an essential first step. Every company that launches an IPO, shares a prospectus with the public offering details about the company’s business and future plans.
Go through this prospectus thoroughly and research the company before making a decision.
02 Open the Required Accounts
You need the following three accounts to invest in a new IPO and trade them in the secondary market eventually:
Demat Account: This is where you store your shares in an electronic form.
Bank Account: A bank account is required to fund your share market transactions. However, a bank account can come in handy to apply for an IPO as well. Almost all net-banking platforms have the facility to apply for IPOs through the Application Supported by Blocked Amount (ASBA) facility.
Trading Account: Trading account is used to buy and sell shares. You can open a trading account with Mbucks.
03 What happens after you apply for an IPO?
The process is a little different. When you apply for a company's IPO, regardless of any method of application, the aggregate amount gets blocked from your bank account.
It will show up in your balance but will not be available for use. Once the allotment is finalised, if you have received the shares the amount will get debited from your account.
If you have not received any shares in the IPO, the amount will be unblocked and will be available for use.