At least three mainboard initial public offerings (IPOs) and four from small and medium enterprises (SMEs) are scheduled to hit the equity markets next week. The total fund raised by these IPOs is expected to be over Rs 1,600 crore.
The four mainboard IPOs are from Nazara Technologies, Happiest Minds Technologies, Chembond Chemicals, and Deepak Nitrite. The four SME IPOs are from Ami Organics, Prabhat Dairy, Indostar Capital Finance, and Triveni Engineering and Industries.
There are four major types of investors who can subscribe to an IPO:
- Qualified institutional investors (QIIs): These are institutional investors such as commercial banks, public financial institutions, mutual fund houses, and foreign portfolio investors (FPIs). QIIs cannot be allocated more than 50% of shares by companies.
- Anchor investors: These are QIIs who can make a minimum investment of Rs 10 crore or more. At least 50% of shares meant for QIIs could be sold to anchor investors.
- Retail investors: These are investors whose application value is less than Rs 2 lakh. A minimum allocation of 35% of the total issued share is under the retail quota. In a scenario where there is oversubscription, all retail investors are required to be allotted at least one lot of shares.
- High net-worth investors (HNIs) or non-institutional investors (NIIs): These are investors who look forward to investing more than Rs 2 lakh. About 15% of the offer is reserved for NIIs by companies. Unlike QIIs, NIIs don’t have to register with the markets regulator, SEBI. Typically, NIIs include resident Indian nationals, eligible non-resident Indians (NRIs), Hindu undivided families (HUFs), companies, societies and trusts.
The upcoming IPOs are expected to be well-received by investors, as the Indian equity markets have been on a bull run in recent months. The IPOs are also expected to provide investors with an opportunity to invest in some of the most promising companies in India.
Here are some of the key things to keep in mind before investing in an IPO:
- Do your research on the company and understand its business model.
- Consider the company’s financial performance and future prospects.
- Evaluate the valuation of the company’s shares.
- Decide how much you are willing to invest.
- Be prepared for the possibility of volatility in the share price after the IPO.
If you are considering investing in an IPO, it is important to do your research and understand the risks involved. However, if you do your homework, IPOs can be a great way to invest in some of the most promising companies in India.