Wish to profit well from an IPO? Knowing these terms is essential to understand specifics of any IPO!
When investing in an IPO, it is important to understand the following points!
Numerous IPOs drew investors in with their considerable issue sizes and bumper listing gains. A lack of knowledge is frequently the reason why investors want to invest in the IPO but are unable to. Investors can feel confident that they have the necessary knowledge to invest by understanding some of the simple terms used in relation to IPOs.
Understanding the specifics of any IPO requires knowing these terminologies -
1. Draft Red Herring Prospectus: It is the preliminary 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: It is the final copy of the prospectus that the company delivered to the Registrar of Companies in advance of the IPO's start. It contains all the information that the investors need to know about the company and the IPO.
3. Offer date: The day that the securities are first made available to the general public.
4. Listing date: The shares are formally listed on the stock exchange to trade in the secondary market after the IPO closes and the share allocation process is complete. The listing date is the day, on which, 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 fixed by the company.
6. Floor price: The floor price is the lowest price, at which, an IPO can accept bids.
7. Issue price: The price at which shares are distributed to investors, following the completion of the allotment process.
8. Listing price: The share's opening price on the day of the listing determines the listing price.
9. Listing gain: The IPO listing gains are the gains that result from the positive difference between the IPO listing price and the offer price. Short-term investors can reap the rewards of IPOs and exit taking profits with the help of listing gains.