Overview
The IPO process begins with the filing of the Draft Red Herring Prospectus (DRHP).
Ends with the listing of the stock on the stock exchanges.
Major steps include: determining issue size, setting a price band, marketing the issue, pricing, and allotment.
Laying the Groundwork
Appoint Book Running Lead Managers (BRLMs)—typically investment banks.
BRLMs handle DRHP filing, coordination with SEBI, and strategic planning.
After DRHP approval, planning begins: pricing strategy, investor outreach, and marketing.
5 Key Steps in the IPO Process
1. Filing the DRHP
Company files the Draft Red Herring Prospectus with SEBI.
After SEBI’s approval, BRLMs move ahead with:
Printing forms
Planning marketing campaigns
Gauging investor interest
2. Marketing the IPO
Tailored outreach for:
HNIs & Institutions: through roadshows in cities like New York, London, Singapore
Retail Investors: via broker networks, media, and ads
Purpose: create demand and visibility across investor segments.
3. Pricing the Issue
IPO price range is set after demand assessment.
A balance is struck:
Attract investor interest
Leave some upside for listing gains
4. Price Discovery
Happens while the issue is open for subscription.
BRLMs monitor demand and work to build oversubscription.
Final price is discovered based on investor bids—often at the upper end of the price band.
5. Listing the Stock
Listing is marked by the bell-ringing ceremony on the exchange.
Once listed, the stock begins trading in the secondary market.
Post-listing performance affects the reputation of the company and BRLMs.
3 Silent but Critical Players in an IPO
1. Marketing Network
Includes brokers, sub-brokers, agents, and distributors.
Operate on commission but are essential to build retail investor demand.
2. Registrar & Transfer Agent (RTA)
Examples: Karvy, In-Time.
Roles include:
Allotment of shares
Transferring shares to investor DP accounts
Generating MIS reports for the company and BRLMs
3. Company Secretary
Ensures legal compliance and manages regulatory documentation.
Prevents future issues with SEBI or stock exchanges.
