What is DRHP? DRHP Meaning, Full form & Best Analysis 2021
Primary Market is on boom right now. Many IPOs like paras defense, Clean Science & Nykaa have given tremendous returns to its investors. IPOs like them attract many new investors & traders to the stock market.
Although, before applying in any IPO you must check it’s DRHP. However, many beginners don’t know what is DRHP? Let’s discuss DRHP meaning, DRHP Full form & things which we need to look into a DRHP.
DRHP Meaning
DRHP is the initial registration document, also known as the offer document, created by merchant bankers for companies wanting to float an IPO for book building issues.
It has been filed with SEBI (Securities and Exchange Board of India), with the goal of raising funds by selling firm shares to investors.
Many people are uncertain about DRHP meaning, but it simply explains why the firm wants to raise funds from the people, how the funds will be used, and the risks that come with investing.
As a result, this document contains information regarding the company’s financials, business activities, industry position, promoters, and listed or unlisted competitors.
DRHP Full Form
The full form of DRHP is draft red herring prospectus. It doesn’t have information of the share price and the quantity of the issue.
The number of shares, as well as the lower and upper price bands, are indicated if the price is not disclosed. Nevertheless, the issuer can declare the size of the offering and then specify the number of shares afterwards.
Information like these are not included in the red herring prospectus submitted with the Registrar of Companies (ROC) in relation to the provisions of the Companies Act for book-built issues.
The Sebi inspected it once it has been submitted to see if relevant disclosures have been made. The merchant bankers are then notified of the observations in order to file the final Prospectus.
How to Read a Prospectus of an IPO?
A merchant banker is hired by a firm looking to float an IPO to compile the offer document. A merchant banker is hired by the issuer company to produce the document.
The merchant banker is responsible for legal compliance and ensuring that all prospective investors are kept informed about public offerings. The following are the key elements of a draft red herring prospectus:
On the first page of the offer document, firms mention the registered name of the company, address & other details like phone number & email id on the top. After that some details about the issue are mentioned like it includes a fresh issue or offer for sale or both.
Next to it, issuers mention the quota for QIBs, HNI & retail investors (sometimes it also includes a separate quota for employees or shareholders of the parent company). After quota risk & general risk can be found.
Originally published at https://profitmust.com on November 10, 2021.
