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Marquee Fellowship

30th April 2023

Initial Public Offering

Introduction:

Initial Public Offering (IPO) is a process of selling shares of a private company to the public for

the first time. The IPO is an important step for companies looking to raise capital for expansion,

research, or other projects. It also provides an opportunity for the general public to invest in a

company and benefit from its growth. In India, the Securities and Exchange Board of India

(SEBI) regulates the IPO process. In this report, we will discuss the IPO process and SEBI's role

in regulating it.

IPO Process:

The IPO process is a complex and lengthy process that involves several steps. The first step is

for a company to hire an investment bank to underwrite the offering. The investment bank will

then work with the company to prepare a prospectus, which is a document that provides

information about the company's financials, operations, and future plans. The prospectus is then

filed with SEBI for approval.

SEBI's Role in IPO Process:

SEBI is responsible for regulating the IPO process in India. It reviews the prospectus to ensure

that it complies with the rules and regulations set forth by SEBI. SEBI also regulates the pricing
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of shares and the timing of the offering to ensure that it is fair to both the company and the

investors.

SEBI has set several guidelines that companies must follow before they can go public. For

example, companies must have a minimum net worth of Rs. 1 crore for at least three years

before they can file for an IPO. Additionally, the company's promoter group cannot hold more

than 75% of the total shares after the IPO.

Trends of IPO in India:

The year 2020 was a difficult year for IPOs due to the COVID-19 pandemic. Many companies

postponed their IPO plans due to market uncertainties. However, the year 2021 saw a significant

increase in IPOs. According to data from Prime Database, there were 49 IPOs in 2021, which

raised a total of Rs. 82,051 crore. This is a significant increase from 2020 when there were only

15 IPOs that raised a total of Rs. 17,178 crore.

The trend continued in 2022 as well, with several high-profile IPOs hitting the market. Some of

the notable IPOs in 2022 include Paytm, Nykaa, and Zomato. According to data from Prime

Database, there were 37 IPOs in the first half of 2022, which raised a total of Rs. 52,952 crore.
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SEBI's Role in Ensuring Investor Protection:

SEBI's primary role is to protect the interests of investors. It does this by regulating the IPO

process and ensuring that companies provide accurate and complete information in their

prospectus. SEBI also regulates the pricing of shares to ensure that investors are not taken

advantage of.

In recent years, SEBI has taken several measures to strengthen investor protection. For example,

it has introduced the concept of anchor investors, who are institutional investors that invest in the

IPO before it opens to the public. This ensures that the IPO is fully subscribed, and it also

provides a benchmark for the pricing of shares.

Conclusion:

In conclusion, an IPO is an important process for companies looking to raise capital for

expansion or other projects. SEBI plays a critical role in regulating the IPO process in India and

ensuring that investors are protected. The trends of 2020, 2021, and 2022 show that the IPO

market in India is growing rapidly, and we can expect to see more companies going public in the

future.
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Works Cited

"IPOs set to bounce back in 2021 after Covid-19 blip", Business Standard, January 5, 2021.

"2021 was a record year for IPOs in India, 49 companies raised Rs 82,051 crore", Economic
Times, January 1, 2022.

"Paytm, Nykaa, Zomato and more: Why India's IPO market is sizzling", BBC News, October 31,
2021.

"37 companies raised Rs 52,952 crore through IPOs in H1 2022: Report", Business Today, July
6, 2022.

SEBI website, www.sebi.gov.in.

PRIME Database website, www.primedatabase.com/

Bibliography managed by Scrible Writer. FAQ.