Understanding IPOs in India

What is an Initial Public Offering (IPO) in India?

• A process where a private company offers shares to the public for the first time.

• A method for companies to buy back their shares.

• A way for companies to issue bonds to the public.

• A process for private companies to merge with public companies.

What does the Draft Red Herring Prospectus (DRHP) disclose?

• Company's financials, risks, objectives, and issue details.

• Only the company's financials.

• The company's marketing strategy.

• The company's employee details.

What are the different methods of issuing shares in the primary market?

• Fixed Price Issue, Book Building Method, Dutch Auction.

• Only Fixed Price Issue.

• Book Building Method and Rights Issue.

• Dutch Auction and Private Placement.

How is the final issue price determined in the Book Building method?

• Based on demand.

• Fixed by the company.

• By a lottery system.

• By the stock exchange.

What is the difference between an FPO and an OFS?

• An FPO is when an already listed company issues additional shares, while an OFS is when existing shareholders sell part of their holdings.

• An FPO is for new companies, while an OFS is for established companies.

• An FPO involves public bidding, while an OFS does not.

• An FPO is a government initiative, while an OFS is private.

What does OFS stand for?

• Offer for Sale.

• Official Financial Statement.

• Open Fund Subscription.

• Operational Financial System.

What has been the trend in the Indian market regarding IPO activity?

• Significant IPO activity from companies like Zomato, LIC, and Nykaa.

• Decreased IPO activity in recent years.

• Only government companies are issuing IPOs.

• No IPOs have been issued in the last year.

What is the role of a lead manager in an IPO?

• To conduct market research for the company.

• To manage the entire IPO process and ensure compliance with regulations.

• To provide legal advice to the company.

• To set the final issue price of the shares.

What is a Rights Issue?

• A method for companies to raise additional capital by offering shares to existing shareholders.

• A way for companies to issue bonds to the public.

• A process where a company buys back its own shares.

• A type of public offering for new companies.

What is the significance of the price band in the Book Building process?

• It indicates the range within which investors can bid for shares.

• It is the fixed price at which shares are sold.

• It determines the minimum number of shares an investor can buy.

• It is used to calculate the company's market capitalization.