How to Pre-Apply for an IPO?
An Initial Public Offering (IPO) marks a significant event in the financial market that offers investors like you an opportunity to buy shares of a company for the first time. With high demand during IPO periods, many investors look for ways to streamline their application process, leading to the popularity of ‘pre-apply IPO’ options. This method offers a chance to secure a position in the subscription ahead of time, enhancing convenience and reducing last-minute rushes. In this blog, we will cover everything you need to know about pre-applying for an IPO, its benefits, and the step-by-step process.
What is ‘Pre-Apply’ in an IPO?
Pre-applying for an IPO allows you to place your application for shares before the official subscription period begins. The feature is available on select brokerage platforms and can be particularly useful for individuals who may not have the time to apply once the IPO opens. Brokers hold your pre-application and automatically submit it when the IPO subscription period starts, ensuring that you don’t miss the opportunity. This eliminates the need for you to remember specific opening times and helps reduce delays caused by high demand on the platform during active IPO periods. Moreover, it provides peace of mind, knowing that your application is securely in place, and you’re ready to take part in the IPO once it opens.
Benefits of Pre-Applying for an IPO
An IPO pre-application can offer you various benefits, such as:
- Avoid System Overload: On the opening day of an IPO, heavy user traffic can sometimes overwhelm broker platforms, leading to slower response times or technical glitches. Pre-application bypasses this risk by processing your request ahead of time.
- Convenience: Pre-applying ensures that you don’t miss out on an IPO due to busy schedules or forgetfulness. Once submitted, you can focus on other priorities, knowing that your application is secure.
- Early Access to Submissions: By pre-applying, you are essentially reserving your spot in line. This helps reduce the risk of being left out due to high oversubscription.
- Better Planning: Pre-apply IPO allows you to manage your funds and time efficiently. Knowing that your application is taken care of, you can focus on evaluating other investment opportunities.
How to Pre-Apply for IPO (Step-by-Step)
Not all brokers support pre-application for IPOs. That’s why you need to choose a broker that offers this feature. When it comes to m.Stock, the process is quite simple and straightforward. Here’s what you need to do:
Step 1: Login to Your Account
Access your brokerage account on either the web portal or mobile application.
Step 2: Find the Upcoming IPO Section
Once logged in, navigate to the ‘IPO’ or ‘Upcoming IPO’ section on the platform.
Step 3: Select the Desired IPO
Choose the IPO for which you wish to pre-apply. You will usually find a pre-apply option next to the IPO listing.
Step 4: Enter Your Bid Details
Input the number of shares you want to apply for and the price. For book-building IPOs, enter your preferred bid price within the allowed range. For fixed-price IPOs, the price is predetermined.
Step 5: Payment via UPI or ASBA
Confirm your application and complete the payment through UPI or ASBA (Application Supported by Blocked Amount). Ensure that your UPI handle is functional.
Step 6: Check Application Status
Once the IPO opens, your pre-application is automatically submitted. You can track the status of your application in your account.
Internal Note: m.Stock team to add the screenshots for each of the steps described here. Please also check if any step is missed or wrongly captured, let me know and i can update.
What Happens After Pre-Applying?
After you pre-apply, the broker automatically processes your application when the IPO goes live. If you receive an allotment, shares will be credited to your Demat account. Remember, pre-applying doesn’t guarantee an allotment; it only ensures timely submission of your application without any hassles.
Who Should Consider Pre-Applying for an IPO?
Pre-apply IPO is particularly beneficial for:
- Busy Professionals: Investors who may not have time to apply when the IPO opens can benefit from pre-applying.
- New Investors: If you are new to investing in IPOs, pre-application simplifies the process and ensures that you won’t miss out due to last-minute delays.
- Frequent IPO Participants: For those who frequently invest in IPOs, pre-applying can streamline the process and ensure timely applications.
Things to Note Before Pre-Applying for an IPO
- Check Broker Availability: Ensure your broker offers the pre-apply option.
- UPI Handle: Make sure your UPI handle is linked to your bank account and functioning correctly to avoid payment delays.
- IPO Timelines: Understand the IPO timelines to confirm that your pre-application is submitted within the allowed period.
- Rules for Subscription: Familiarise yourself with the specific IPO’s rules, including minimum and maximum share applications.
Conclusion
Pre-applying for an IPO offers multiple benefits, from convenience to ensuring your application is submitted without last-minute rushes. While it doesn’t guarantee an allotment, it helps streamline the process, making it an excellent option for busy investors. By understanding how to pre-apply for an IPO, you can take better control of your investments and potentially secure shares in high-demand offerings.
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FAQ
Can I pre-apply for an IPO?
Yes, certain brokers allow you to pre-apply for an IPO before the official subscription period. You can submit your application in advance, and it will be processed automatically when the IPO opens.
How do I get into pre IPOs?
To participate in pre-IPOs, you need to find brokers or platforms that offer pre-application services. After logging into your account, navigate to the upcoming IPO section, and submit your details.
Is there any benefit in pre-apply IPO?
Pre-applying for an IPO offers the advantage of avoiding high-traffic times on the platform. It ensures timely submission and increases convenience by allowing you to complete the application in advance.
What happens after I pre-apply for an IPO?
After you pre-apply, your application is queued and automatically submitted when the IPO opens. If your application is successful and shares are allotted, they are credited to your Demat account.
Is pre-apply available for all IPOs?
No, unlike m.Stock, not all brokers or IPOs offer a pre-apply feature. It depends on the brokerage platform and the specific IPO. Check with your broker if they provide this option.
How is the payment processed for pre-applying?
Payment is typically processed through UPI or the ASBA system. Once you enter your bid details and confirm, the required amount is blocked until the IPO process is completed.
Does pre-applying guarantee allotment of shares?
Pre-applying does not guarantee an allotment. It only ensures that your application is submitted on time. The allotment depends on factors such as the demand for shares and the investor category.
Can I cancel or modify my pre-application?
Yes, in most cases, you can cancel or modify your pre-application before the IPO opens. Check your brokerage platform for specific rules regarding modifications.
What are the requirements to pre-apply for an IPO?
You need to have a Demat account with a broker that offers pre-application services. You also need sufficient funds in your linked bank account for the payment.
What is the benefit of pre-applying in IPOs?
Pre-applying saves time, reduces the stress of applying during busy subscription periods, and lowers the risk of missing out due to high platform traffic or system overloads.
