Struggling with IPO filing? AI might come to your rescue soon

Artificial intelligence (AI) became a buzzword in the tech industry with the launch of ChatGPT in 2022. The emerging technology is now being used in various industries and more and more sectors are trying to find ways to use the technology to their benefit. Now, AI might come to your rescue even if you are struggling with IPO filings.

Sebi chief Madhabi Puri Buch, during a conference, said that IPO filing will get faster and even easier with the help of AI. She also elaborated on how AI is already being used for processing of public documents and does 80 percent of the job.

Sebi chief on AI making IPO filing quicker

According to an Economic Times report, Buch talked about plans to process IPO documents using AI during an FICCI conference. She revealed that a fill-in-the-blanks template form is in the works which will simplify the process of IPO filing for companies.

As a result, the entire process can be fast-tracked as only the final approval will come from an officer. For young companies, this could mean that filing an IPO is not just quicker, but easier as well as there could be set templates that they will just have to fill in.

The report quoted Buch saying, "The normal track (of processing of IPO applications) would be so fast that you won't need fast track."

IPO process in India

In India, the process of filing an Initial Public Offering (IPO) involves several steps. Firstly, the company hires an underwriter or investment bank to guide the process. These financial experts analyze the company's financial health and sign an underwriting agreement detailing the deal, the amount to be raised, and the securities being issued.

Next, the company prepares a registration statement and a draft prospectus, known as the Red Herring Prospectus (RHP), as mandated by the Companies Act. This document includes definitions, risk factors, use of proceeds, industry and business descriptions, management information, financial statements, and legal details. The RHP must be submitted to the registrar of companies three days before the public offering and must comply with SEBI regulations. Following this, the company applies to SEBI for IPO approval.

SEBI then verifies the company's disclosures. If approved, the company announces the IPO date. Subsequently, the company applies to the stock exchange to list its shares.

The pricing of the IPO can be done through a Fixed Price Offering or a Book Building Offering, where a price range is announced, and investors bid within this range. The booking period usually lasts three to five working days, during which investors can revise their bids. After bidding, the final price, or Cut-Off price, is determined.

Finally, the company, along with the underwriters, allocates shares to investors. In cases of oversubscription, partial allotments are made. The shares are typically allotted within ten working days of the last bidding date.