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Different investors select different ways in which they want their money to grow. One way is to invest in an Initial Public Offering (IPO). Visit https://www.investmentz.com/ to know more!<br>
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Introduction • Different investors select different ways in which they want their money to grow. One way is to invest in an Initial Public Offering (IPO). • However, gaining profits from an IPO stocksis not as simple as it sounds. An investor must learn strategies and apply tips on how to invest in an IPO in India if they want beneficial long-term prospects.
1. Research The Performance of The Company • This is the first and most important tip on how to invest in an IPO in India. • An investor should also check the company’s revenues before the launch of the IPO – has there been an increase or is the company an underperformer?
2. Know How Your Money Is Being Used • An investor should clearly read the IPO prospectus which states how they will make use of the huge capital that they raise. • The plan of action may include devising new products, bettering their infrastructure or just clearing off debts. If the prospects look promising, the chances of buying will be positive.
3. Pick A Company With Strong Brokers • A time-tested principle, quality brokerages bring quality companies public. An investor should exercise more caution when selecting smaller brokerages because they may be willing to underwrite any company. • When looking at how to invest in an IPO in India, an investor should ensure that a reputable investment bank – for e.g. Goldman Sachs – is on board.
4. Learn The Difference Between An IPO and A New Fund Offer • While both IPOs and new fund offers raise money from the public, the latter are launched by mutual fund houses looking to introduce new fund ideas in the market. • In IPOs, there is an important aspect of valuation unlike in new fund offers. • In a new fund offer, the level of the market is more of a priority than how an investor’s money is going to be used.
5. Ideally, Wait For The Lock-In Period To End • The lock-up period is a legally binding contract (3 to 24 months) between the underwriters and insiders of the company prohibiting them from selling any shares of stock for a specified period. • It shows the strength of the company if the brokers or underwriters are still holding onto their shares after the lock-in period.
