What Actually Happens in an IPO

1.1 — Sunrise needs money it doesn't have

Years on, Sunrise Bakery has quietly become Sunrise Foods — cakes, wedding catering, packaged biscuits sold across four states. Meera and Arjun want to build a factory. It'll cost more than the whole business earns in three years.

They have two real choices. Borrow it, and owe interest whatever happens next, good year or bad. Or sell a slice of the company to people they'll never meet, take their cash, and owe them nothing except a share of whatever the business turns into.

That second choice is an IPO — selling shares to the public for the very first time, in exchange for money the company never has to repay. Except that's only half the real picture, and it's the half almost everyone misses.

1.2 — Two very different kinds of share on sale

Open any offer document and the issue is described as fresh, offer for sale, or both — and the difference decides whose pocket your money actually lands in.

• ▹**Fresh issue** — brand new shares get created and sold. The money goes to the COMPANY, to actually build the factory. Existing owners get diluted: same number of shares, smaller slice of a bigger pie.
• ▹**Offer for sale (OFS)** — existing owners sell shares they already hold. The money goes to THEM. The company gets nothing and issues nothing — ownership just changes hands.

Both can appear in the same issue, at the same price, and you can't choose between them as a retail applicant. Here's how ACME Solar's ₹3,000 crore issue actually split.

1.3 — The queue you're actually standing in

Suppose Sunrise Foods does exactly this. A retail investor named Priya sees the ad, decides she wants in, and logs in the moment bidding opens — thinking she has a fair shot at whatever she can afford.

She doesn't realise the shares were carved up long before she ever clicked anything.

Look at that first row. Anchor investors got handed nearly 45% of the entire issue at a fixed price, one working day BEFORE the book even opened to Priya. By the time she could place a bid, almost half the shares were already gone.

Anchors aren't a loophole — locking in big institutions at a fixed price a day early gives an issue a visible floor of demand, and those investors face their own lock-in so they can't dump immediately. But for Priya, the effect is real either way: she's competing for a tenth of the pie.

1.4 — Why that split isn't the company's own choice

Here's the part almost nobody knows — and it turns that allocation table into something you can actually read like a signal.

SEBI offers two routes to a mainboard listing. Regulation 6(1) is the profitability route, for companies with a real track record of operating profit. Regulation 6(2) exists for companies that CAN'T meet that bar — and it comes with a condition attached: at least 75% of the offer must go to qualified institutional buyers, retail is capped at 10%, and if that 75% threshold isn't hit, the entire issue gets refunded.

ACME Solar's filing records its eligibility as Regulation 6(2). Add up its buckets: anchors 44.84% plus QIB 30.77% is 75.61%. Retail is 10.08%.

The logic behind it is protective: a company with no profit history carries more risk, so SEBI makes professional investors absorb three-quarters of it and caps how much can be sold to individuals. Whether that's welcome protection or patronising is a fair debate — but the fact that it's happening, and it's visible right there in the numbers, is not.

1.5 — Bidding, and what "subscribed three times" really means

Two details that trip people up. Face value has nothing to do with what you actually pay — ₹2 here against an issue price of ₹289, and it tells you nothing about the shares being cheap or expensive. And you can't buy fewer than one lot, so Priya's entry ticket was ₹14,739 whether she wanted to spend ₹5,000 or ₹50,000.

The issue was subscribed 3.0 times — three times as many shares bid for as were on offer. When that happens, the retail bucket is allotted by lottery. More applications don't improve your odds. More lots in one application don't help beyond the first. Which is exactly how a perfectly good application, like Priya's, comes back with nothing.

1.6 — After the book closes

Bids are counted, the final price is fixed, shares are allotted, and trading begins — five days after closing, on this issue.

One gap worth naming, because it comes back in chapter 3: the basis of allotment — the exact date shares are formally allotted — is never published in the exchange feeds we ingest, so this site doesn't show it. Some sites display an estimated date; we'd rather show nothing than a number we can't actually source.

Meera and Arjun end up doing a mostly-fresh issue. Arjun wanted to sell off a slice of his own personal holding alongside it; Meera points out that asking strangers to fund a factory while the founders quietly cash out is a very hard sentence to write in a prospectus. They settle on a small offer for sale and a much larger fresh issue — roughly what ACME Solar itself did.

The next chapter is about the document all of this gets written down in — and why the very first version of it has no price written anywhere at all.