IPO – Initial Public Offering
When a Public Limited Company offered shares to the public to become a Private Limited Company
Types
1. Fixed Price Issue
All Shares are offered at a set price.
2. Book Building Issue
The price band is given, and investors are used to bid within the range.
3. Offer for Sale (OFS)
All Existing shareholders sell their shares to the public.
Eligibility
Min ₹10 crore post-issue capital.
Profits in 3 of the last 5 years.
Net worth: ₹1 crore in last 3 years.
Track record of at least 3 years.
IPO Eligibility for Companies (Mainboard – SEBI Guidelines)
When a company is launching an IPO,it meet certain criteria:
Net Tangible Assets of at least ₹3 crore in the last 3 years.
Profit Track Record – At least ₹15 crore of profit (before tax) in the last 3 years.
Net Worth – Minimum ₹1 crore in the last 3 years.
Post-Issue Capital – At least ₹10 crore.
At least 3 years of operations.
No default with banks or creditors.
Minimum 1,000 public shareholders after the IPO.
PPROCESS
Board Approval – Company decides to go public.
Appoint Advisors – Merchant bankers, legal advisors, etc.
SEBI Approval – File DRHP (Draft Red Herring Prospectus) with SEBI.
Marketing/Roadshows – Promote the IPO to investors.
Price Band Finalized – (for book building).
Open for Subscription – Investors apply.
Allotment & Listing – Shares allotted, listed on stock exchange (NSE/BSE)
Benefits of IPO
Raise large funds for business growth.
Build brand and public trust.
Early investors can exit.
Shares become tradable assets.
