InvestorQ : How does a company price and market an IPO?
Mahima Roy made post

How does a company price and market an IPO?

Moii Chavate answered.
3 years ago
Once the DRHP and the offer document are approved by the exchanges and by SEBI, the next step is to work out the marketing plan. The company along with its merchant bankers conducts road shows across key financial centers like New York, London, Singapore, and Hong Kong to make a pitch to institutional investors like global banks, Hedge Funds, and Sovereign Funds. The retail and HNI portion are sold through broker meets domestically and through the network of broker and distributors.
The next step is the fixing of the price bank of the IPO. The IPO application forms are printed with these indicative price bands at which investors can apply. The price band is arrived at jointly by the company and the merchant banker after assessing the appetite of the retail and institutional investors for the issue. Retail investors have the benefit of investing at the cut-off price without mentioning the exact price in the bid. They are automatically allotted shares at the price that is finally determined. Once the issue is closed and the requisite applications are processed, the next step is to finalize the basis of allotment. This basis of allotment has to be filed with the SEBI and the exchanges for their approval. Post the allotment and the receipt of the funds into the bank account of the company, the shares are allotted and credited to the demat accounts of eligible shareholders. Once these formalities are done and dusted, the next step is to complete the listing ceremony. The listing ceremony that is conducted at the exchange on the day of listing, which is normally 10 days after the issue closes. From that day, the shares get listed and can be officially bought and sold on the stock exchanges.