IPOs are a fantastic way for businesses to develop and thrive. Initial Public Offerings, or IPOs, are the quickest method of increasing an investor’s wealth.
What is an IPO?
An initial public offering, sometimes known as an IPO, is the procedure for going public with a privately held business. When a business is privately held, its owners or stakeholders own all of the company’s shares. When the owners of the business decision to go public, they apply to list their company on stock exchanges like the BSE or NSE.
They also offer investors the chance to subscribe for a portion of their shares. During the subscription period, investors invest in the IPO while waiting for the listing during the subscription period.
Why apply for an IPO?
Some of the perks of applying for an IPO include the following:
- First, you gain early access to a business with great potential for growth by investing in an IPO. It can help you make a sizable profit quickly and help your money expand over time.
- A current IPO investment is comparable to an equity investment. Over time, they may provide you with good profits.
- Since the price per security is stated in the IPO order paper, IPOs offer transparent pricing.
- Bonus shares, dividends, and other benefits are available to shareholders.
Eligibility Criteria to Apply for an IPO
- As per the legal rules, you must be an authorised investor.
- You need to have both a Demat and a trading account with any authorised Depository Participant, such as Shoonya, the best trading company in India.
- A Permanent Account Number, also known as a PAN, is required.
- You must link the Demat account to your bank savings or current account.
- The application must be funded with enough credit in your bank account.
Is a Demat account mandatory for applying for an IPO?
In a dual sense, yes and no. Although, in some cases, it is possible to apply for an IPO in some cases without having a Demat Account, however, having one is advised because the allotted shares can only be traded through a Demat Account. It is noted that a Demat account may not be required for applying for an IPO via ASBA but to buy or sell shares; a Demat account is mandatory.
Also, a Demat account is required to apply for an IPO with securities valued at ten crore INR or higher. Shares from the allocated IPO will be moved to the investor’s Demat account.
How can you apply for an IPO without a Demat account?
Steps for submitting an online IPO application:
- Log in to the online banking portal of the bank that supports ASBA.
- Select IPO under “Investment Section”
- You must enter the information for your depository.
- Make your bank account selection and finish the verification.
- You can now choose the IPO.
- Enter the share count and the bid price.
- To complete the process, click “Apply now.”
Steps for submitting an offline IPO application:
- Go to the bank or stock broker branch that is closest to you.
- Complete the ASBA e-Form with the required information. It is available for download on the NSE website.
- Finally, put the required amount on the check.
- The desired amount will be blocked in your account after completing the IPO application.
- The money will be debited only post the allotment of shares.
Conclusion Given how effortless it is to register a Demat account, there is no excuse not to do so. The above-stated points make it crucial for you to have a Demat account to apply for an IPO. Visit Shoonya, the best zero-commission website for trading, to open a free Demat account online.