IPO Funding & Offerings

Initial Public offers (IPOs) are one of the rewarding investment opportunities available to investors in India. Good amount of profits can earned in a very short term (6 to 10 days) by investing in IPOs. Profits from the IPO investment can be maximize by applying for large chunk in High Networth Individual (HNI) category where the allotments are done in a proportionate basis in case of oversubscription. Shortage of funds usually affects investor’s ability to earn from good IPO’s.

IPO Funding (or IPO Financing) is a loan offered for applying in primary stock market  by NBFC’s to high net worth individuals (HNI). The investor pays only small margin for applying in IPO and rest amount is funded by the lender. As per ICRA, over Rs 20,000 IPO funding is offered in a good mainline IPO.

Through IPO Funding, an investor can leverage its own funds in primary market and thereby maximize the profits in a very short span of time. IPO Funding Loans are mostly available to HNI clients. It helps HNI’s who would like to maximize their chances of allotment in an IPO.

End-to-end Process of IPO Funding

In most cases, the lender takes care of end to end process of IPO application for its customers who are availing IPO funding. A dedicated relationship manager is made available which helps the customer with the process. Here are few standard steps:

• Open Funding Accounts with Lender (One time)
• Open a Demat Account with Lender or provide PoA to an existing account (One time)
• Fill forms for IPO funding and provide all required documents (One time)
• Let lender know about the IPO to invest in, quantity and date.
• Pay the margin or create the security
• Funds disbursed within 24 working hours of the request
• The leader apply for IPO share on your behalf.
• Money get blocked while allotment is in progress.
• Allotted shares are credited in to the demat account and money is withdrawn for the allocated shares.
• Customer instruct lender to sell the allocated shares.
• Settle the profit/losses with the lender.