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01 THE VALUATION SCHOOL | PARTH VERMA
Process for filing an

Initial Public Offer
Aajao Samjhte hai!
02
What is an IPO ?
An Initial Public Offering (IPO) is the

process through which a private company
becomes public Company
After the IPO, investors can

buy company shares on the
stock exchange.
SEBI usually control the Initial

Public Offering (IPO) process to
guarantee transparency
THE VALUATION SCHOOL | PARTH VERMA

03
Need for an IPO?
It give the chance for

companies to raise funds
and expand their business
01
Opens a broader range

of financial options for
future growth
02
Attracts more investors
and individuals for future
expansion & growth
03
Company’s shares can
easily be traded which
enhance brand visibility
Access for institutional 04
investors to invest in the
company Ex.Mutual funds,
Insurance companies etc. 05
04
Process for filing an IPO
#1 The company asks a group of

banks for help
The bank checks

the assets and liabilities
and decides how much
money the company needs
Then they sign a deal

called an underwriting
agreement.

05
What is Underwriting
agreement ?
It is an agreement between the underwriter

(bank) and the issuer (company)
Where the underwriter agrees to purchase

the remaining shares of the company
If that is not purchased by the public during

IPO i.e. in case of undersubscription.
This is necessary because there is a

minimum number of shares which must
be purchased from the public for validation
of the IPO.
Let’s move towards the Next Step of process.

06
Preparing RHP:
(Red Herring Prospectus)
Red Herring Prospectus (RHP) is like an

upgraded version of DRHP (Draft Red Herring
Prospectus) including IPO dates, prices and
current financial data.
A DRHP contains all the key details of the

financial activities and overall business of the
company.
That’s why it’s a very crucial report.
RHP

07
DRHP is important for investors to know

what they'll gain and what are the potential
risks to decide their investment strategy
The company and the bank files

Draft Red Herring Prospectus
DRHP and other documents are required to

be submitted to the local Registrar of
Companies (ROC)
At least 3 days before opening the IPO

to the public.
08
Verification by SEBI:
After completion of previous steps, the
IPO goes to the SEBI with an initial
prospectus
SEBI reviews the documents,

making sure they follow all
the rules
If all good, the IPO is good to go.
If not, SEBI add comments and

the company has to fix them
Only after SEBIs approval, the company

can set the IPO date and release the final
financial prospectus.

09
Applying to the stock exchange:

After SEBI gives approval for RHP,
Company has to submit the copy of RHP

and all important documents to the
stock exchange
After reviewing the application,

the stock exchange decides whether to
go ahead for the IPO or not
RH
P
10
Promotion/Marketing time:
The company then promotes its IPO to
investors like QIB(Qualified Institutional Buyers)
and retailers, two weeks before the IPO
goes public
The company focuses on presenting

growth and profitability to attract more
institutional investors and individuals to
invest in the IPO
IPO LELO!!

11
Pricing for IPO:

There are 2 ways for IPO pricing:
Fixed Price
Book Building
In Fixed Price, a specific share price is

determined.
Small and
Generally used by SME IPOs. medium
sized ent
erprises
Book Building lets investors bid within

a price range.
Generally used by Mainboard IPOS

(Big companies)
12
Mainboard IPO SME IPO
Minimum post issue paid up Minimum post issue capital of

capital of Rs 10 crore Rs 1 crore and maximum
Rs 25 crore
Minimum number of Minimum number of

allotees should be 1000 allotees should be 50
IPO Underwriting is IPO Underwriting is

Non-Mandatory Mandatory
IPO Application Size IPO Application Size

Rs 10,000 - Rs 15,000 Rs 100000

13
Applying for IPO:

Now the public can file IPO application
forms from brokers and submit online
when the IPO bidding opens
IPO d Sucessfully
Submitte
The company submits the final prospectus

to both ROC and SEBI with allotted shares Stock B
roker
and the final price details after IPO

bidding closes
Allotment of shares:
If IPO is undersubscribed, investors gets the full
quantity of applied shares
If IPO is oversubscribed, the allocation of shares will

based on a lottery system through a computerized process
Investors without any allocation, their money gets refunded
14
Completion of IPO process:

Following allotment, the company’s share
gets listed on the stock market exchange
Now, investors can trade and research

on investing in the company
Investors after Getting IPO

16
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01 THE VALUATION SCHOOL | PARTH VERMA

Process for filing an

An Initial Public Offering (IPO) is the

After the IPO, investors can

SEBI usually control the Initial

THE VALUATION SCHOOL | PARTH VERMA

Need for an IPO?

It give the chance for

Opens a broader range

Process for filing an IPO

#1 The company asks a group of

The bank checks

Then they sign a deal

THE VALUATION SCHOOL | PARTH VERMA

It is an agreement between the underwriter

Where the underwriter agrees to purchase

If that is not purchased by the public during

This is necessary because there is a

Let’s move towards the Next Step of process.

Red Herring Prospectus (RHP) is like an

A DRHP contains all the key details of the

That’s why it’s a very crucial report.

THE VALUATION SCHOOL | PARTH VERMA

DRHP is important for investors to know

The company and the bank files

DRHP and other documents are required to

At least 3 days before opening the IPO

SEBI reviews the documents,

If all good, the IPO is good to go.

If not, SEBI add comments and

Only after SEBIs approval, the company

THE VALUATION SCHOOL | PARTH VERMA

Applying to the stock exchange:

Company has to submit the copy of RHP

After reviewing the application,

The company focuses on presenting

THE VALUATION SCHOOL | PARTH VERMA

Pricing for IPO:

In Fixed Price, a speciﬁc share price is

Book Building lets investors bid within

Generally used by Mainboard IPOS

Mainboard IPO SME IPO

Minimum post issue paid up Minimum post issue capital of

Minimum number of Minimum number of

IPO Underwriting is IPO Underwriting is

IPO Application Size IPO Application Size

THE VALUATION SCHOOL | PARTH VERMA

Applying for IPO:

The company submits the final prospectus

and the final price details after IPO

If IPO is oversubscribed, the allocation of shares will

Completion of IPO process:

Now, investors can trade and research

Investors after Getting IPO

THE VALUATION SCHOOL | PARTH VERMA

SAVE Future Reference

bek Like shi

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