Initial Public Offerings (IPOs) are a great opportunity for investors to enter the market and invest in a company before it goes public. Once it goes public, the company needs to prepare extensively and provide financial and operational updates, as transparency is crucial at this stage. Investors must also be thorough before committing their time and wealth to any company.
But what if an investor wants to cancel their IPO application? There are specific guidelines and procedures in place to ensure this can be done smoothly. We highlight the steps you must take to cancel your IPO application, along with the cancellation charges, if any, and what it means to cancel your request successfully as an investor.
What does it mean to withdraw an IPO application?
An IPO withdrawal occurs when an investor chooses to take back their initial demand for purchasing shares of a company going public.
This decision may be influenced by various issues, including changes in the financial status of the investor, alterations in market trends, or lack of faith in the potential of an organisation. Whatever the reason, an IPO withdrawal can greatly affect the shareholders, investors, and the firm.
For an investor, it may mean missing out on a potentially lucrative investment opportunity. For the company, it could result in a smaller pool of potential investors and a less successful IPO.
Proven methods to cancel an IPO application
How to cancel an IPO application? Cancellation procedure varies depending on the route taken. The two main ways through which investors generally apply for an IPO are:
1. IPO ASBA Application
2. IPO UPI Application
Cancelling an ASBA IPO application can be accomplished by following these steps:
- First, go to the mobile app or website (your net banking account) you used to apply for the IPO.
- Proceed to the IPO section and access the Order Book.
- Select the transaction ID of the completed IPO application.
- Afterwards, click ‘Cancel Bid’ or ‘Withdraw’.
- Finish by clicking ‘Submit’ to complete this action successfully.
Conversely, you can cancel a UPI IPO application by following these steps:
- First, go to the mobile app or website (your net banking account) you used to apply for the IPO.
- Proceed to the IPO section and access the Order Book.
- Select the transaction ID of the completed IPO application.
- Afterwards, click ‘Cancel Bid’ or ‘Withdraw’.
- Finish by clicking ‘Submit’ to complete this action successfully.
- For this method, the additional step is cancelling or rejecting the UPI mandate.
The broker may help you with the cancellation process if you provide all the additional details within the time limit. Also, investors are advised to keep records of the IPO cancellation.
Anytime between 10 A.M. and 5 P.M. IST, the broker can file a cancellation request with the exchange. Once the confirmation is received, the status of the cancellation request will be updated. You will be notified via email when your application is successfully cancelled.
Key considerations for withdrawing your IPO application
In addition to knowing how to cancel the IPO application, it is important to know the process and rules of withdrawing an IPO bid. Some important aspects to keep in mind are provided below:
- No charges will be incurred when an IPO application is terminated.
- Currently, stock market brokers allow round-the-clock receipt of applications, but bid lists are sent to the exchange between 10 A.M. and 5 P.M. Therefore, it is only during this time that you or an investor can cancel their bid.
- Timeframes for cancelling bids on the closing day may be tighter.
- Different banks have different deadlines for refunding any money taken from a customer’s account after cancellations.
- Instead of terminating, you could also opt to alter your application.
Also read: IPO allotment process
Aspects influencing a company's decision to revoke their IPO
A company may need to cancel its IPO application due to several internal factors, and these can be a concern for you as an investor. Let us discuss the determinants that can influence a company's decision to terminate or withdraw its IPO.
Some disadvantages associated with going public include higher regulatory compliance costs, increased scrutiny, and disclosure requirements. While these increase the firm's credibility, they can also make a company reconsider its decision to go public. Additional factors can include market conditions, internal business matters, and timing of regulatory approval.
There are some obvious advantages as well when a company goes public. These include being able to raise large amounts of funds for the company’s growth or expansion, enabling future investments by companies, and enhancing liquidity among its existing shareholders. It also enhances corporate reputation in the general market.
Also read: Cut-off price in IPO
Conclusion
The process of cancelling an IPO application may seem confusing, but with proper guidance and adherence to the guidelines, it can be accomplished with the help of a stockbroker. This process is not time-consuming and can be completed relatively quickly.
Regardless of the reason for cancelling an IPO application, it is essential to follow all proper steps to ensure it is done correctly. By doing so, you can avoid any potential complications that may arise due to improper cancellations.
