IPO Funding is a simple credit concept where a loan is facilitated to you by Hindustan Tradecom for your IPO Investment. Being a very niche concept, most people in India are unaware of this type of loan and its process. For any queries, you can check the official website of Hindustan Tradecom by clicking here. You can get complete information regarding the rate of return, tenure, and the complete procedure for applying for an IPO Financing Loan from the HTPL website.

The tenor of IPO Funding:

In most cases, IPO Funding loans are for seven days. You can hold or sell your shares based on current trends and the nature of the securities you purchased. The interest rate remains between 7.25% to 12% depending upon the IPO.

How Does It Work?

If one were to take an example, say if an investor were to apply for the IPO of a company expecting it to be oversubscribed 100 times. The private lender would then ask for a 1% margin. If the IPO were to get oversubscribed 100 times successfully, then of the 100000 shares the investor applied for, he would be allotted 1000 shares, and balance application unblocking would get adjusted against IPO loan and interest thereon – regardless of whether or not it resulted in the successful allotment. Suppose the total loan remains outstanding even after unblocking. In that case, the application amount goes towards liquidating the allotted shares on the listing. The balance loan gets repaid from sell proceeds by ensuring that all lenders get their dues and investors get dividends.

Repayment Of IPO Funding Loans

The loan amount and the margin amount remains locked in the PoA bank account till the allotment is announced. Usually, the allotment is of equal or lesser value as the margin amount given by the client. On a listing day, if all client dues are clear, the shares are transferred into the Demat account of the client. From the Demat account, the client wishes to sell the allotted shares into the market or hold them for long-term investment.

Advantages of IPO Funding with HTPL:

1. Assured allotment in HNI category
2. Application just a phone call away
3. Handsome profits in a small timeframe
4. Margins as low as 0.1% to 3% (both securities or cash)
5. Hassle-free single time documentation and application
6. Best in class interest rates

Requirement for IPO Funding:

You can apply for IPO funding at HTPL by following simple steps:

• Open a Demat account with POA
• Open a current account with POA

End to End IPO Funding Process with HTPL:

You can follow these simple processes to get your final profits in the form of listing gains on IPO. The best part is that all these processes can be completed within 7 days, and you can get high listing gains quickly.

• Open Funding Accounts
• Provide PoA to your existing Demat account or open a new one
• Provide the filled IPO Funding form
• Tell about your investment target, quantity, and date
• Deposit margin & upfront interest payment
• Funds would be disbursed within 24 hours
• The lender applies on your behalf for the IPO allocation
• IPO allotted shares credited in your Demat account, where simultaneously the money is withdrawn for the allotments
• Enjoy listing gains by selling the shares or holding them for long term investment

An Intuitive Example:

Assume there is a company XYZ Ltd coming up with IPO. The client wants to place a bid of Rs. 10 crores. They have to deposit a margin amount (typically between 0.3% to 3%) – Rs. 3,00,000 (assuming 0.3%). Secondly, they have to pay an upfront interest amount (typically between 7% to 10%) for 7 to 10 days – Rs. 1,52,840 (assuming 7 days at 8% at amount Rs. 9,97,00,000). Now suppose the client gets an allotment of 300000. (2000 shares at 150 each). Now the share gets listed at Rs 275, the client makes a profit of Rs. 250000. And a net profit of Rs. 97160.