Purpose of the IPO Process
The IPO process starts with the company’s decision to go public and the appointment of investment bankers.
It ends with the listing of the stock on the exchange.
The main objective is to secure a strong market valuation while ensuring there is value left for investors to benefit from listing gains.
A successful IPO helps enhance the company’s reputation and market credibility.
Role of Investment Bankers (Book Running Lead Managers - BRLMs)
BRLMs are central to the IPO process and often include multiple bankers for large issues.
They advise the company on issue timing, pricing, and regulatory compliance.
They conduct roadshows to generate institutional interest and coordinate with retail distribution networks.
They support post-listing investor relations and stock performance.
Seven-Step IPO Process
Appointment of Investment Bankers
The IPO process begins with hiring BRLMs.
They manage compliance, marketing, demand assessment, allotment procedures, and investor engagement.
SEBI Approval
The Securities and Exchange Board of India (SEBI) must be notified and approve the IPO plan.
Only after initial clearance can the next steps proceed.
Regulatory Filings
The company, assisted by the BRLMs, files the Draft Red Herring Prospectus (DRHP) with SEBI.
SEBI reviews and may request clarifications before giving the final go-ahead.
Once approved, the prospectus is made public.
Marketing the Issue
With DRHP approval, the company and BRLMs begin marketing the IPO.
Roadshows are conducted in global financial hubs to attract institutional investors.
Retail investors are reached through brokers, media, and distribution channels.
Pricing the IPO
Based on demand estimates, the price band for the IPO is set.
Applications are invited within this band, and the final price is discovered through book building.
Managing the IPO Process
IPO forms are distributed and made available online and offline.
Brokers and depositories are mobilized to upload applications before the cut-off time.
The process is coordinated to ensure smooth execution without last-minute disruptions.
Basis of Allotment
After the issue closes, allotment is determined based on oversubscription levels across investor categories.
The basis of allotment is finalized and approved by the stock exchanges.
The registrar processes the allotments and credits shares to investors’ demat accounts before the listing date.
Time Sensitivity of the IPO Process
The IPO process is highly time-bound.
Every step, from filing to allotment and listing, follows strict regulatory timelines.
Effective coordination is essential to avoid delays or compliance issues.
