FAQ ON IPOs

[>take]

I have one more query - What is bookbuilding method in IPO? How shares are alloted under this method?

Book building is the process of price discovery. During the fixed period of time for which the subscription is open, the book runner collects bids from investors at various prices, between the floor price and the cap price. Bids can be revised by the bidder before the book closes. The process aims at tapping both wholesale and retail investors. The final issue price is not determined until the end of the process when the book has closed. After the close of the book building period, the book runner evaluates the collected bids on the basis of certain evaluation criteria and sets the final issue price.

Source - Wikipedia.org

[Tushar]

What is listing gain? (I have read about this in some forum and people talk about listing gain with IPO.)

[smartcat]

What is Greenshoe option in IPO?

[rohit]

What is listing gain? (I have read about this in some forum and people talk about listing gain with IPO.)

IPO are generally priced at a discount, which means that if the intrinsic value of a share is perceived to be Rs.100 the shares will be offered at a price, which is lesser than Rs.100 say Rs.80 during the IPO. When the stock actually lists in the market it will list closer to Rs.100. The difference between the two prices is known as Listing Gains, which an investor makes when investing in an IPO and making money at the listing of the IPO.

[rohit]

What is Greenshoe option in IPO?

A provision contained in an underwriting agreement that gives the underwriter the right to sell investors more shares than originally planned by the issuer. This would normally be done if the demand for a security issue proves higher than expected. Legally referred to as an over-allotment option.
Source - investopedia.com

[Praveen]

I have two demat account one with ICICI Direct and another with HDFC Sec. Both of them offer online application to apply IPO online. I have a query that -Can I apply through both the above account? or is there any restriction in it.

[CA_Amit]

You can apply from any of the account, but if you apply from both the accounts than the allotment will not happen to you. Because at the time of allotment they check with PAN no. and if they find similar PAN no., they will remove you from the list.

[Praveen]

You can apply from any of the account, but if you apply from both the accounts than the allotment will not happen to you. Because at the time of allotment they check with PAN no. and if they find similar PAN no., they will remove you from the list.

Thanks Amit. But I have forget to mention in my previous post that one of my account in joint account with my wife. So if my wife and I apply, still would the IPO shares not allotted to me?

[CA_Amit]

Thanks Amit. But I have forget to mention in my previous post that one of my account in joint account with my wife. So if my wife and I apply, still would the IPO shares not allotted to me?

Normaly they take the primary demat holder name and PAN card details. So if you are the primary account holder than you avoid applying from both accounts, but if other wise go ahead and apply.

[BlackCaps]

Queries -
1- If an issue is oversubscribed.what happens to exta money we paid, when is it returned back [usual time frame]?
2- In partial payment option in some cases, extra money paid at the time of application, when is it returned back [usual time frame]?