Hyundai Motor India launched India’s biggest IPO of Rs 27,856 crore on October 15 which  was closed on Thursday with an oversubscription of 2.37 percent.

About IPO

• Public Issue: When a company raises funds by selling or issuing its equity shares to the public through an offer document 
• Initial Public Offerings (IPO) : It is a type of issue where an unlisted company raises capital by making a fresh issue of securities or offering its existing securities for sale to the public for the first time.
  • An unlisted company is one whose shares are not traded on a public stock exchange.
  • “Listed Company” means a company which has any of its securities offered through an offer document listed on a recognised stock exchange and also includes
    Public Sector Undertakings whose securities are listed on a recognised stock exchange.
• Further Public Offer (FPO) / Follow-on Public Offer (FPO): When a listed company wants additional capital, it makes either a fresh issue of securities or an offer for sale of existing securities to the public 
• Offer for sale (OFS) : Under the offer for sale method, securities are not issued directly to the public but are offered for sale through intermediaries like issuing houses or stock brokers.
  • Special mechanism through which the promoters can sell their stake in the market.

Check Out UPSC Modules From PW Store

Regulations of IPO

• The Security and Exchange board of India (SEBI) has laid down rules that require companies to meet certain criteria before they can go to the public to raise funds.
  • Company must have net tangible assets of at least Rs 3 crore, and 
  • Net worth of Rs 1 crore in each of the preceding three full years,  and 
  • Must have a minimum average pre-tax profit of Rs 15 crore in at least three of the immediately preceding five years.
• Who is Allowed to Invest in an IPO?
  • Qualified Institutional Buyers (QIBs): This is a category of institutional investors that includes Foreign Portfolio Investors (FPIs), mutual funds, commercial banks, insurance companies, pension funds, etc.
  • Retail investors: All individuals who invest up to Rs 2 lakh in an issue 
  • High net worth individuals: Retail investors investing above Rs 2 lakh