It is always a dream for an investor to get allotted an IPO. If you are a beginner, you may not know what does an IPO means. Let us discuss this in brief in this article.
Initial public offerings
Not all corporations will come into the share market. If any company wants to go public, it should register with the nation’s stock regulatory body. This body will review whether the company has the necessary financials to be listed in the stock exchange. If everything is fine, the body will let the company issue its initial set of shares in the market for the public. This set of initial shares from the company is known as the initial public offerings. The capital raised from this IPO will go to the company for various needs like an extension of operations and repayment of debts. The shareholders could sell the shares once they get listed in the market. However, it is not like the process of buying stocks in the live market. If you want to buy shares from an IPO, you have to apply and wait for allotment. There will be some procedures to follow to get the shares allotted. Let us discuss these procedures in brief.
The application of an IPO will happen for three days. Some IPOs could last for five days also. During this period, you should use your brokerage website or application to apply to the IPO. You would have to maintain a sufficient balance in your bank account to buy the shares. However, you could not buy shares in the numbers you wish. IPO shares will be available in lots. For instance, an IPO will come in lots of ten shares. If so, you should pay the amount for ten shares at once. If you want more, you would have to buy in multiples of ten. Once you submit the necessary documents and payment, your application will be accepted. However, the 股票轉倉 will happen only after the successful allotment process.
There is a misconception among the newbie investors that they could get the shares that they have applied for in the IPO. But some factors decide the allotment of the applied shares to your account. The first thing to consider will be the number of applicants for the IPO. The company would have issued only one crore shares for the IPO. If there are applications for more than three crores, the company could not provide stocks to every applicant. So, they will conduct a lottery process and choose a random set of applicants for the provision of shares. Only these investors will get the shares. However, there is no surety that they will get all the shares that they have applied for. If you do not get an allotment, your money will get back to your account within one or two days.
After a few days of allotment, the shares will appear in the market for ordinary trading.