IPO glossary
IPO glossary in plain language: GMP, lot size, price band, QIB, NII, anchor investor, RHP, DRHP, basis of allotment, OFS and more.
- Allotment
- The process of distributing IPO shares to applicants.
- Anchor investor
- A large institution that is allotted shares a day before the IPO opens, with a lock-in.
- ASBA
- Application Supported by Blocked Amount: money is blocked in your account and debited only on allotment.
- Basis of allotment
- The method by which shares are allotted to each category and applicant group.
- Book building
- Price discovery by taking bids within a price band.
- Bid
- Your application for shares at a price within the band.
- Cap price
- The upper end of the price band.
- Cut-off price
- Bidding option that accepts the final issue price decided in the band.
- DRHP
- Draft red herring prospectus: the draft offer document filed with SEBI.
- Floor price
- The lower end of the price band.
- Fresh issue
- New shares issued by the company; money goes to the company.
- GMP
- Grey market premium: the unofficial premium at which an IPO is said to trade before listing.
- Issue price
- The final price at which shares are allotted.
- Kostak
- A grey-market amount paid for an IPO application regardless of allotment.
- Listing gain
- (Listing price − issue price) ÷ issue price.
- Lock-in
- A period during which certain shares cannot be sold.
- Lot size
- The minimum number of shares you must bid for.
- Mainboard
- The primary listing platform of NSE and BSE.
- NII / HNI
- Non-institutional investors bidding above ₹2 lakh.
- Offer for sale (OFS)
- Existing shareholders sell shares in the IPO; money goes to them.
- Price band
- The range within which investors can bid.
- QIB
- Qualified institutional buyer such as a mutual fund or insurer.
- Registrar
- The agency that runs allotment and refunds for an issue.
- Retail investor
- An individual bidding up to ₹2 lakh.
- RHP
- Red herring prospectus: the near-final offer document with the price band.
- SME IPO
- An IPO of a smaller company listed on NSE Emerge or BSE SME.
- Subscription
- Total bids divided by shares on offer, shown as “times subscribed”.
- T+3
- Listing three working days after the issue closes.
- UPI mandate
- The request you approve in your UPI app to block money for an IPO bid.
- Underwriter / lead manager
- The merchant bank that manages the IPO process.