How To Apply For an IPO offline?

Last Updated: 27 Jun 2022

IPO or Initial Public Offer is a process where a private company goes public and wants to expand its territories and business at large. With an IPO, the private company can put its shares on the stock exchange for trading. Investors who buy these shares become an owner of that company to an extent of the share value.

IPO is one of the many trajectories for a company to go public. It not only helps private companies generate the necessary finance for their businesses or expansion purposes but also creates public awareness of those companies as well. There are many advantages for the companies after issuing the IPO.

For instance, the earned funds from the Initial Public Offer issue can be put to good use by enhancing the machinery, investing in sound yield projects, etc. There are numerous other pros to an IPO which you’ll learn ahead in this article. Before learning about how to apply for an IPO offline, it’s significant to know how it works.

Basic Criteria For an IPO

When a company sets up their business, it will need extra money to meet its business needs. Through an IPO, the company gets swift access to capital. Furthermore, the company gets listed on the stock exchange allowing investors to buy their traded shares in the secondary market. Plus, at the time of negotiating loans, IPO companies get an added advantage over privately-owned companies.

The Securities Exchange Board of India (SEBI) is the supervising authority and regulating watchdog for the stock market and related activity. They review the criteria of the company before passing a green signal to process the IPO. Once SEBI confirms, the company can start issuing their first issue to the public.

The criteria here is that the company should possess net tangible assets of no less than 3 crores in each of the preceding 3 years. Also, the company should manifest at least 15 crores of operating income for the last 3 years in the previous 5 years. Lastly, the IPO size shouldn’t surpass 5 times the worth of the company. If the company fails to meet even one of the aforementioned criteria, it can send an IPO ratification request to SEBI asking the same.

Steps On How To Apply For An IPO Offline

Since you learned and understood the functioning of an IPO, let’s talk about how to apply for an IPO offline? Preferably, many companies go for an online IPO as it is easy but some opt for applying offline. Here, we’ll walk you through a series of steps that’ll guide you on how to buy an IPO offline.

Investors who want to buy an IPO offline should have a separate Demat account if they want to sell the shares for profit at a certain date in the future. Then, follow these steps to accomplish your task:

1. Get an IPO offline application form from a broker
2. Fill out the application form by adding the data correctly
3. Post-filling the information, submit the same to the broker with a cheque.
4. Upon submitting, the investor receives the acknowledgement form.
5. If the investor wishes to apply or buy an IPO beyond Rs 50000, they have to submit a copy of the PAN card along with the IPO application form.

The above is one method on how to apply for an IPO offline. Another alternative way to proceed with this is by presenting the IPO form to the bank. The steps are as follows:

1. Open the BSE/NSE website, search for the IPO application form and download it.
2. Take the downloaded IPO application copy and fill in all the details properly.
3. The form consists of information like the applicant’s name, PAN number, bid price, etc.
4. Finally, visit the nearest ASBA participating bank branch and present your form.

However, before enduring the whole above process, have a look at the NSE/BSE portal and confirm whether your bank is partnered or associated with ASBA participating bankers or not. Almost certainly, several banks are linked to this IPO issue. On the web portal, you can take a glimpse of all the major bank branches connected with this.

Benefits of Applying Offline

Since you have learned about how to apply for an IPO offline, now it’s time to know their benefits and why investors go head over heels when they hear of any IPO launch.

The inflow of Additional Capital

The foundation for a business is the capital. However, getting finances to fund the business is not an easy task. Companies have to endure a prolonged process and a series of steps. Investors and venture capitalists don’t invest unless there are gigantic returns on the investment. With an IPO (Initial Public Offering), the common public is the source for generating the required funds. These funds can be used for marketing, research and development, marketing, and other business purposes.

The window of Opportunities

The best part of buying an IPO is that investors can buy the shares of the company at a low price. If the company grows, it can sell high. Plus, the investor becomes an equity holder and a part-owner of the company to an extent of the share’s value. Besides, there’s transparency involved in IPO issues. This means that every investor gets to witness the same information about the IPO like the date of issue, pricing, entry date, etc.

Aid You Attain Your Goals

Every investor has some financial goals they wish to achieve. By investing in equities, investors can fulfil a few of them. Since IPOs are nothing but new issues of equity shares, the potential to attain considerable gains is predominantly high in the future. The returns earned on equity are enormous as you are taking high risks while going through the market volatility.

Attract New Investors

A private company has only a limited number of customers along with investors who know about their ongoing business. Once the IPO is issued, the same company will get listed publicly. In other words, the whole world will get to know their presence in the market. If the company starts flourishing, its public image, brand goodwill, and reputation also increase simultaneously. Hence, this attracts venture capitalists, big investors, and banks to invest in the public listed company.

Liquidity

In any business, profits and losses are shared proportionately among all the employees in the company. The same is with the share market as well. IPO gives a company an entry ticket to create substantial wealth to invest in their business. Upon earning profits, the company shares those benefits equally among the investors and stakeholders.

Frequently Asked Questions

Can I Apply For An IPO Twice?

No, you cannot apply for an IPO more than once with the same Demat account. Since all your details are already registered to that account, your application will get declined.

Are There Any Extra Charges For Applying Offline?

There are no charges required to pay for applying online or offline.