What is an IPO cycle?

What is an IPO cycle?

You probably know what an IPO is if you are on this page. If you do not, an IPO or initial public offering is the first time a company issues shares to the public. Through an IPO, the company turns itself into a publicly-traded company. A company comes out with an IPO to raise funds for various reasons. However, the company cannot issue an IPO and list itself on the stock exchanges on any day, out of the blue. The life cycle of an IPO or the IPO cycle starts several months before the listing of the IPO. The process is a lengthy, comprehensive process.

The IPO cycle starts with the submission of the registration statement of the company to SEBI (Securities and Exchange Board of India). SEBI then evaluates the company’s statement and gives its approval. Without SEBI’s approval, the company cannot launch its IPO. However, the company can prepare its Draft Red Herring Prospectus or DRHP. The DRPH contains some essential details like the company’s financial performance and business plans. Then the top management of the company and investment bankers try to find high net investors to invest in the IPO.

Once SEBI gives its approval, the company can make its DRHP public and decide on the stock exchange it would get listed. Only after that, the company announces its final price band and bidding dates for the IPO. On the bidding dates, investors bid for the IPO, and then after a few days, shares are allotted according to the subscription status. Finally, the company then gets listed on the exchanges. If you want to invest in IPOs, you need to have a Demat account. You can open a Demat account with IIFL Securities by visiting their website.