INITIAL PUBLIC OFFER

Companies issue shares to the public on receipt of applications as per the prescribed requirement. The allotment sealing for the public is 35%, along with public the shares may also be allotted to various institutions and fund managing firms. The general public category is also referred as retail investor category. The whole process of allotment is known as IPO or Initial Public Offer. If the issue is over subscribed then the company may allot the shares on lottery basis as per the conditions mentioned by the SEBI.

IPOs are further classied as Fixed Price IPO and Book Building IPO.

In case of Fixed price IPO, the issue price of the share is fixed and the investor can apply easily.

For Book building IPO, price band is specified and the investor can apply as per his idea. The issue price is not known in advance. Lowest price is known as the floor price.