IPO Financing

[sangfroid22]

Hi Fellow Traders,

IPOs are back and the listing gains are so tempting.

Coming to the point, Id like to know about IPO Financing.

I understand that many banks offer IPO loans, provided 50% margin is brought in by the investor.

Lets say, I apply for a IPO worth Rs.1 lakh. I contribute 50% amount and the bank contributes another 50%. Assume, I was allotted IPO fully.

Now, as Ive taken IPO loan, I will have to pledge the shares to the Bank.

So, my query is, if I pledge the shares, Will I be able to sell the stock (in case I make listing gains) ????

As the Shares are pledged in the Banks own demat a/c and not all banks provide their trading platform, how do I sell the shares to capture listing gains??

Which brokerage houses provide IPO financing with little or no documentation??

In case I decide to close the IPO loan, do Ive to pay the bank in cash or can I ask them to liquidate the shares and adjust the loan amount and return the balance ??

What are the banks providing demat a/c and own trading platform ??

Thanks

Sangfroid

 

[ranj_2k]

Dear Sangfroid,

I had availed the facility of IPO financing of Jet Airways 5-6 years back from IDBI Bank. As far as I remember, they will open a new demat a/c at the time of IPO financing. If you invest Rs.1 lacs in any good IPO you will not get the 100% allotment. If you are lucky, you will hardly get one time or two times of minimum lot. That means you need not to pay additional money as you have also contributed 50% of subscription amount. If you wish to sell the same for listing gain on listing day itself, you must have a trading a/c with any broker. However, it will be adviseable to have trading a/c with financier. You can either transfer the shares in demat a/c with broker before listing or you can sell the same and give delivery from your demat a/c with Financier within the required time frame.

Thanks