A company can register to become an IPO through IPO registration online. The detailed steps are mentioned below.
STEP 1: The first thing to do while launching an IPO is to hire an investment bank. An investment bank could be a merchant banker, underwriter, and lead manager. In basic definition, an investment bank is a particular segment of banking that helps companies raise their capital and provide consultancy services. They serve as intermediaries between companies and their investors. The investment banks analyze the companies’ financial status, explain the stock offerings, etc.
STEP 2: The next step of the process is to register for IPO with the necessary documents. The company needs to furnish an IPO Draft Prospectus (DRHP) which consists of details like the company particulars, promoters, IPO details, and risks. These documents are submitted to the Securities And Exchange Board Of India (SEBI).
STEP 3: The company now has to submit an application to one of the 17 active stock exchanges in India. The biggest and most popular stock exchanges of India are National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). However, to list their stocks on NSE, there are a few requirements that are to be met by the company.
STEP 4: Once the official work is over, then begins the marketing of the upcoming IPO. Immediately after submitting the prospectus documents to SEBI, a company is eligible to promote its IPO. Such a promotion is known as ‘Road Show.’ Marketing agencies make the advertising of the IPO more viable.
STEP 5: Next comes the most crucial part of the IPO process; deciding the price of a share. This decision is reached upon based on one of the two ways to price a share: Fixed price offering, and Book Building offering. After the share offering is priced, the company submits an IPO Red Herring Prospectus (RHP), a more detailed version of a DRHP. The RHP, also known as the IPO Final Prospectus, consists of all the information about the issuer company and the proposed IPO. Since an RHP is a vital source of information, it is provided to all the investors, thus considered an essential record and is mandatory according to the Companies Act.