Table of Contents
Can I lose all my money in IPO?
If you are investing in any Initial Public Offer just for listing gains then you can gamble with your money. Therefore, the gain in two IPO’s and loss in one might be enough to wash out all the gains.
“Undersubscribed” refers to a situation in which the demand for an issue of securities such as an initial public offering (IPO) or another offering of securities is less than the number of shares issued.
What happens if an IPO is undersubscribed below 90\%?
As mentioned earlier in the piece, in case the IPO is undersubscribed below 90\%, the shares are forfeited and the money is refunded. The taint of undersubscription can affect any company. For instance, Google, one of the technology giants, has also faced this issue in the past.
Is there any loss to the investors in an IPO?
There is no loss to the investors as the money they invested will be returned to them. The issuing company will not receive any money though. Although there is no profit or loss made, the confidence enjoyed by the company in the market will suffer a blow. First, check the grade assigned by SEBI to the company floating an IPO.
What is the minimum amount required to close an IPO in India?
According to SEBI (Securities and Exchange Board of India), every company needs a minimum subscription of 90\% of the issued amount on the date of closure. In the event of this not happening, the company refunds the entire subscription amount it received.
Do investors lose money when a company does not have underwriters?
Yes, Indirectly both Investors and Company lose money. When not guaranteed by underwriters, the company lacks money for their process of development. This will make the company a big debtor with a increased debt-equity ratio. When the stock hits the secondary market, definitely it won’t attract many buyers.