Do you want to take advantage of an IPO? Knowing these terms is essential to understand the specifics of any IPO!
When investing in an IPO, it is important to understand the following points!
Numerous Initial Public Offerings attracted investors with their massive issue sizes and exceptional listing gains. A lack of knowledge is often the reason why investors want to invest in the IPO but cannot. Investors can be sure they have the knowledge to invest by understanding some of the simple terms used in connection with IPOs.
Understanding the specifics of any IPO requires knowing these terminologies –
1. Draft Red Herring Prospectus: This is the draft prospectus that the company sent to SEBI at least 21 days before the initial public offering (IPO). During these 21 days, SEBI reviews the prospectus and requests changes.
2. Red Herring Prospectus: This is the final copy of the prospectus that the company submitted to the Registrar of Companies before the start of the IPO. It contains all the information investors need to know about the company and the IPO.
3. Offer date: The day the securities are first made available to the public.
4. Listing date: The shares are officially listed on the stock exchange for trading in the secondary market after the closing of the IPO and the end of the share allocation process. The quote date is the day the shares become available for trading on the markets.
5. Lot Size: The minimum number of shares a bidder must purchase is known as the lot size. It is set by the company.
6. Floor Price: The floor price is the lowest price at which an IPO can accept offers.
7. Issue price: The price at which the shares are distributed to investors, after the completion of the allocation process.
8. Quotation price: The opening price of the share on the day of quotation determines the quotation price.
9. IPO Gain: IPO gains are the gains that result from the positive difference between the IPO price and the offering price. Short-term investors can reap the rewards of IPOs and stop taking profits with the help of listing gains.