Written by Upstox Desk
7 min read | Updated on July 31, 2025, 18:25 IST
IPO definition
The need for IPO
Criteria for filing IPOs
Initial Public Offering (IPO) Process Overview
Upstox is a leading Indian financial services company that offers online trading and investment services in stocks, commodities, currencies, mutual funds, and more. Founded in 2009 and headquartered in Mumbai, Upstox is backed by prominent investors including Ratan Tata, Tiger Global, and Kalaari Capital. It operates under RKSV Securities and is registered with SEBI, NSE, BSE, and other regulatory bodies, ensuring secure and compliant trading experiences.
Initial Public Offerings (IPOs) can be rewarding investments. As an investor, you definitely don't want to miss out on these opportunities that don't present themselves all too often. Here’s what you need to know about IPOs before investing.
Key Points
An IPO or an Initial Public offering, is an offer of new shares of a private company to the public for the first time. Ownership changes hands - from being entirely privately held, the company is now giving ownership to the masses.
Let’s get the basics out of the away first:
But, why do companies feel the need to raise money through IPOs? Of course, behemoths such as IKEA, Flipkart, Dell etc are still privately held by a few investors (in fact, Dell went back to being privately held after an IPO).
Though this might be the case with some companies, not every company can afford to raise enough money from private investors. Also, going public presents other benefits than just raising capital. Here are the reasons why companies go public.
Did You Know? Not all IPOs are a success. In 2012 - Samvardhana Motherson’s IPO had a disappointing start - with only 23% of its shares being subscribed.
As stated earlier, SEBI is the regulating authority here. It checks if criteria and norms laid down are met by companies before their proposed IPOs can be opened for public investment. What are these criteria and norms that companies have to fulfill? Let's take a look.
The following are the eligibility norms for companies planning to file an IPO as stipulated by SEBI.
Even if these criteria are not fulfilled, the company can still file a request for approval of an IPO with SEBI. But, for such approvals, the IPO can only take the **book building**route where 75% of the stock has to be sold to Qualified Institutional investors (QII). This has to be done for the sale of stocks under the IPO to be held as valid. Otherwise, the IPO is cancelled and the capital raised has to be returned.
SEBI functions to protect the interests of investors while ensuring that norms aren't too stringent to dissuade prospective companies that have the potential and the vision to deliver growth.
Underwriter: An underwriter is the one (or a group of investment banks) who assesses a company’s financial needs and decides the price/price range of shares, number of shares etc. They also participate in the drafting of an IPO’s application to SEBI.
Finally, after the IPO comes to an end, the new public stock is listed on a stock exchange. From then on, trade can take place in the publicly held shares on the stock market. As an investor, you stand to make extremely high returns on your investment if you pick the right IPOs. It’s similar to spotting talent for a sports coach - with the right find, you stand to witness history being made!
Wrapping Up
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Upstox Desk
Upstox Desk
Team of expert writers dedicated to providing insightful and comprehensive coverage on stock markets, economic trends, commodities, business developments, and personal finance. With a passion for delivering valuable information, the team strives to keep readers informed about the latest trends and developments in the financial world.
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