IPO Investing Process: IPO Investing (Initial Public Offering) can be done in either fixed price or book building or both ways. In a fixed price, the price of share presented in the market are already decide or fixed that cannot be changed. In book building, the scope of the price is fixed for the shares within which the investors have to bid. Booker's help is taken to fix the price band and to complete the bid work. The job of a bookkeeper is usually done by a company specializing in an investment bank or securities case.
100% advance payment is made in the fixed price method and after the allocation, the amount is returned, while in the Book Building Method the payment is made after allocation.
50% of the allocation in the fixed price method is reserved for investment below 2 lakh and for the remaining upper amount investors, while 50% allocation in the Book Building Method is reserved for QIB and remaining 35% is for small investors and the remaining is reserved for the other investors.
IPO's share price pricing is fixed in two ways:
1. Price Band 2. Fix Pricing
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