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Initial Public Offering - IPO Trading Account

The initial public offering is the first stock a company puts up for sale when it becomes public. This happens when a privately held company turns into a public entity and its shares are trading on the stock market. When it becomes a public company, the company shares its ownership rights. Once the shares become public, the company allocates shares to investors based on demand.
When the IPO process is underway, a small set of shares is reserved for different types of investors. These include individual or retail investors, institutional buyers such as investors who are qualified and high net worth.
If you want to invest in an IPO, you need to do deep research about the company you want to buy shares from. You need to check their historical record in the case of their IPO. You should see if their promoters are reliable. The products offered by the company should have good growth potential. Read the prospectus carefully about how to open IPO account.

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How to Open Equity Account

The best way to invest in an IPO is by opening an IPO trading account. Here are the formalities:

STEP - 1

The first step is to fill the equity trading account opening form. It can be done either on or online on any of AngelOne's (Formally known as Angel Broking) network of offices across the country.

STEP - 2

You need to submit documents to prove your address and identity. These can include PAN cards, Aadhaar cards, passports, voter cards, etc.

STEP - 3

Along with opening an IPO account, you will also have to open a Demat account to buy and sell shares.

STEP - 4

The company representative will contact you to verify the details you have given.

STEP - 5

After the verification process is done, you can start applying for IPOs.

Advantages of Initial Public Offering (IPOs)

Below are the advantages of initial public offering (IPOs) before investing:

  •   Early Investor Gains - from a long-lasting perspective, you can invest in a company that may grow over time - especially a company that came up with an innovative new product or service. Investment of USD 1,000 in Microsoft in 1986 will be more than $1.5 million today! Of course, not every company is Microsoft, and it is difficult to predict the future fate of any company. But it can be a gamble worth taking.

  •   Make Immediate Gains - sometimes, the price of the IPO goes up as soon as the shares are listed on the exchange. So there may be an opportunity to make a quick profit. You should remember that companies usually sell IPOs for a little bit as to what their actual value is so that it attracts the interest of investors, and the IPO is fully subscribed. Once the company is listed, the price may rise, and keep your shares out of your reach if you want to buy them.

  •   Preferential Behavior for Small Investors - SEBI guidelines provide preferential treatment to small investors in the allotment of shares and also price discounts. So it offers cash in an opportunity for small investors.

  •   Price Transparency - Entrepreneurship is the foundation of capitalism. Without it, an economy cannot grow and prosper. To grow, entrepreneurs need money, and IPOs are the best way to go about getting something. It can be difficult to expand new companies without an IPO.

  •   Encouraging Entrepreneurship - IPO prices are more transparent than shares in the secondary market, i.e. shares listed on the stock exchange. You know what the cost is, how they are coming, and they are the same for all investors.

There are many things you need to know before investing in an IPO. Remember, while companies try to create a discussion in the markets just before launching the IPO, you need to make sure you research the company thoroughly before investing. Moreover, the best stock market broker in India suggests that firstly understand the entire process well enough and fill the application form correctly to avoid unwanted rejection.

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