IPO Investing


Any restrictions on pricing by companies?

Companies are allowed to freely price their issues. SEBI does not play any role in deciding the price for issues. As such, the single prices in case of fixed price issue as well as the price band in the case of a book building issue are determined by the company. The companies are however required to give in the offer document a detailed justification of the price. The basis of issue price is disclosed in the offer document. The issuer is required to disclose in detail about the qualitative and quantitative factors justifying the issue price.

Differential Pricing

Where one category of investors is offered shares at a price different from the other category, it is called differential pricing.

The following are the different categories of investors to whom shares can be issued at different pricing:

  1. Retail investors: An issuer can allot the shares to retail individual investors at a discount of maximum 10% to the price at which the shares are offered to other categories of public.
  2. Employees: An issuer company can offer the shares to employees at a discount of maximum 10 % of the floor price at which the shares are offered to other categories of public.

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