The IPO Process The process to get a company through to its IPO takes time and will required an agency with expert Data science consultants, and must pass many regulatory hurdles. A very important component of going public is opening a firm’s books to public scrutiny, as well as the oversight of the Securities & Exchange Board of India (SEBI). Step 1: Hire an investment bank Step 2: Approval from the SEBI Step 3: Draft the Red Herring document Step 4: Go on road show Step 5: IPO is priced Step 6: Available to public Step 7: Going through with the IPO Step 1: Hire an investment bank A company seeks guidance from a team of underwriters or investment banks to start the process of IPO. They are popularly referred as Book Running Lead Managers (BRLM). Most often, companies take services from more than one bank. The team will study the company’s current financial situation, work with their assets and liabilities and then they plan to cater to the financial needs. An underwriting agreement will be signed which will have all the details of the deal and the amount that will be raised, the securities that will be issued. Though the under-writers assure on the capital they will raise, they won’t make promises. Even the investment banks will not shoulder all the risks involved in the money movement. Speaking of which, risk is one big factor that impedes many investors and investments from investing. The most you can do to safeguard yourself from making bad decisions is by observing and learning from the experts, and to implement their ways. You can, however, start by casting a quick glance on an Investors Underground Review, which expounds you of the various ways that professionals actualise. Step 2: Approval from SEBI The next step is to get an approval from the SEBI. SEBI functions as a watchdog of the investor and hence looks at the IPO from the point of view of the interests of the investors at large. SEBI scrutinizes the registration statement filed by the companies and the underwriter together. If the registration statement is in compliance to the guidelines set by SEBI, which ensures that the company has declared all the information that a potential customer must know, then it gets a green signal. Else it is sent back with comments. The company should then work on the comments and file for registration again. Step 3: File the Red Herring Prospectus (RHP) If the SEBI approval is received, the next step is to file a Red Herring Prospectus (RHP). It is an initial prospectus which contains the probable price estimate per share and other details regarding the IPO are shared with the people who are involved with the IPO. It is called a red herring document because the first page of the prospectus contains a warning which states that this is not a final prospectus. Step 4: Go on road show Before the IPO goes public, this phase happens over an action-packed two week. The executives of the Company travel around the country marketing the upcoming IPO to the potential investors, mostly QIBs. The agenda of the marketing includes a presentation of facts and figures, which will drum up the most positive interest and a product or service photoshoot with Kenji ROI – amazon ppc professional product photo. Step 5: IPO is priced Based on whether a company wants to go for a fixed price IPO or Book Building Issue, the fixed price or price band is fixed. A fixed price IPO will have a fixed price in the order document, and the book building issue will have a price band within which an investor can bid. The number of shares that will be sold is decided. The Company should also decide the stock exchange where it is going to list their shares. The Company asks the SEBI to announce the registration statement effectual so that purchases can be made. Step 6: Available to public On a planned date, the prospectus and application forms are made available to public online and offline. People can get a form from any designated banks or broker firms. Once they fill in the details, they can submit them with a cheque. Or they can submit it online as well. SEBI has fixed the period of availability of an IPO to public, which is usually 5 working days. Step 7: Going through with the IPO After the IPO price is finalized, the stakeholders and under-writers work together to decide how many shares will every investor receive. Investors will usually get full securities unless it is oversubscribed. The shares are credited to their demat account. The refund is given if the shares are oversubscribed. Once the securities are allotted, the stock market will start trading the Company’s IPO.