One can invest in an IPO online as well as through an offline method. The investor can apply for IPO stocks by filing an application form with stockbrokers for free. ICICI Bank, Share Khan, Zerodha and various other brokerage houses and banks provide these services to their clients.
Many market beginners face the challenge of applying for initial public offer (IPO) in the primary market. Now, one can invest in an IPO online, as well as, through an offline method.
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Companies enter primary market or introduce IPO to the shareholders when they want to raise funds from the public. Listing shares on the exchanges help companies with funding their working capital, debt repayment, acquisitions and any other business operations.
The investors can apply for a certain number of (IPO) stocks on the primary market by filing an application form with stockbrokers for free, say Angel Broking. ICICI Bank, Share Khan, Zerodha and various other brokerage houses and banks provide these services to their clients.
How to apply in an IPO?
A demat account is prerequisite to apply for an IPO. This account can be opened simply with any broker house or a bank (like ICICI Direct or HDFC Securities).
Once you activate your demat account, look for Application Supported by Blocked Accounts (ASBA) facility by SEBI, which is compulsory for IPO application process, according to Angel Broking.
In ASBA, you do not have to issue a cheque or pay any money for the IPO till the allotment is made. The amount to the extent of your application is blocked from your bank account and on the allotment day, the amount will be automatically debited to the extent of the shares allotted.
ASBA is also available in physical form, all you need is your demat account number, PAN number, bank account number and bidding details. Once you sign this document, the broker will block the money in your bank account for the IPO.
Meanwhile, in case of stockbrokers like Zerodha, they have an option called as 'IPO' under 'Portfolio' section on the console's dashboard.
From there, one can select IPO of his/her choice, enter UPI ID, make the payment, place bids and submit their IPO application.
If the IPO issue is oversubscribed then there's a possibility that you may get fewer shares or none at all. In such cases, the bank or the broker will unlock your bid money on the issue.
However, in case you get lucky and receive full allotment then you must expect a Confirmatory Allotment Note (CAN) within six working days after the last date of the IPO application process.
These shares are then transferred to your demat account or portfolio upon getting listed on the exchanges after seven days from the finalisation of the issue, says brokerage ShareKhan.