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Context:
India’s IPO market has touched historic highs, raising about ₹3.8 lakh crore through 701 IPOs during 2024–25, surpassing the total capital raised in the previous four years combined. This reflects strong investor confidence, deepening capital markets, and robust corporate fundraising.
About Initial Public Offering (IPO)
An Initial Public Offering (IPO) is the process by which a private company offers its shares to the public for the first time, raising equity capital and becoming a publicly listed company on stock exchanges such as National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE).
Types of IPOs in India
Fixed Price Issue
- A single, pre-determined issue price is fixed by the company in consultation with merchant bankers.
- Investors know the exact price at which shares are offered.
Book Building Issue (Most common in India)
- Shares are offered within a price band (floor price to cap price).
- Final issue price is discovered based on investor demand during the bidding process.
Stages of an IPO Process
1. Preparation & Due Diligence
- Appointment of investment banks/merchant bankers
- Financial, legal and regulatory checks
2. DRHP Filing
- Draft Red Herring Prospectus (DRHP) filed with Securities and Exchange Board of India (SEBI)
- Discloses business details, risks, and financial information
3. Pricing & Bidding
- Issue price or price band announced
- Investors place bids during the subscription window
4. Basis of Allotment
- Registrar finalises allotment based on demand and SEBI norms
5. Listing
- Shares are listed on stock exchanges
- Trading begins in the secondary market
