The Complete IPO Guide for Indian Investors · Chapter 2 of 15
History of IPOs in India
Before 1992: controlled pricing
Until the early 1990s, the Controller of Capital Issues decided whether a company could raise money from the public and at what price. Prices were set by formula and were usually low, so issues often listed at large premiums to their offer price, and the gain went mostly to those who could get allotments. Disclosure was thin and investor protection weak.
1992 onward: SEBI and free pricing
SEBI received statutory powers in 1992 and the pricing controls were removed. Companies could now price their shares with their bankers, and disclosure norms were built up step by step. Pricing freedom brought new risks: some companies raised money with inflated claims and then collapsed, which led to tighter rules on disclosure, promoter lock-ins and the use of proceeds.
Book building and the online era
Book building arrived at the end of the 1990s, letting the market discover the price within a range. Paper forms gave way to online bidding on the exchanges' systems. ASBA (Application Supported by Blocked Amount) meant your money stayed in your own account, blocked until allotment, rather than being paid out and refunded later. UPI-based applications then made it possible to apply from a phone in a couple of minutes.
Landmark issues
Large issues such as Reliance Power (2008), Coal India (2010), Life Insurance Corporation (2022) and Hyundai Motor India (2024) showed how deep demand from retail and institutional investors can run. New-age technology listings in 2021 showed another lesson: a hot subscription does not protect you from a falling price later if the valuation was too high.
The SME platforms
NSE Emerge and the BSE SME platform opened a route for smaller companies to list with lighter rules. They have grown rapidly and now account for a large share of the number of issues each year, though a small share of the money raised. The SME IPO Handbook in this library covers them in detail.
Why history helps
Every rule in this book, from anchor lock-ins to the cap on price bands, exists because of a past problem. Knowing the reason makes the rules easier to remember and to apply.
Key takeaways
- Pricing was controlled until 1992; since then it is market-led within SEBI's disclosure rules.
- ASBA and UPI made applying simple and keep your money in your account until allotment.
- A record-setting subscription does not guarantee a good post-listing return.
- Many current rules were created in response to past abuses.