New Offer versus OFS
These are two types of IPOs. In a new offer, fresh capital is raised by the company and the capital of the company expands. In Offer for sale (OFS), the existing shareholders sell their shares in an IPO. No fresh money comes in but ownership changes.
Fixed price issue versus Book Building issue
In fixed price issue, final issue price is fixed by the issuer and applicants can only apply at that price. In Book Building, the price is discovered as the book gets built based on the price at which IPO can be fully subscribed. Nowadays, all issues are book built.
BRLM versus underwriter
Book running lead managers (BRLM) manage the IPO from regulatory approvals to marketing to listing. Underwriters guarantee to take a portion of the issue, if it is undersubscribed.
DRHP versus RHP
Draft Red Herring Prospectus (DRHP) is filed with SEBI at least 21 days before the IPO for comments. Red Herring Prospectus (RHP) is the final prospectus filed with the Registrar of Companies (ROC) just before the IPO giving all issue details.
Price Band versus Floor Price
Price band is the price range to bid for the IPO. The price band is decided by the company with the lead manager. Normally, price band is lowest for retail category. The lower end of the price band is called floor price.
Offer Date versus Listing Date
Offer date is the opening date of the IPO. Normally, IPOs are open for 3 working days. The listing date is when the IPO stock lists on the NSE/BSE. Listing date is normally 7-10 working days after the IPO close date.
Lot Size versus maximum retail lots
A minimum lot in IPO has approximate value of Rs15,000. Retail applications are limited to Rs200,000, so maximum lots are around 200,000/15,000 = 13 lots. IPO applications and allotments are done in multiples of lots.
Oversubscription and Greenshoe Option
If valid applications for the IPO are more than the shares offered, the issue is oversubscribed. Green Shoe option is a special privilege available to retain oversubscription up to a certain limit.
Applications supported by blocked amounts (ASBA) is a facility that only blocks the application amount and the actual debit only happens on allotment so that you don’t lose interest till then.