How to Cancel an IPO Application?

Companies are going public every week via IPOs, and you may find yourself wanting to invest in several companies. However, when applying for an IPO, you might be wondering if you can cancel your IPO application due to shifting market conditions or any unfavorable information about the firm. Don’t worry, we’ve got you covered.

In this blog, we will explain the procedure for canceling your IPO application and understand the reasons behind it. 

What is Withdrawal of an IPO Application?

Withdrawal of IPO application is the process used by investors who decide they do not want to proceed with their initial application and want to release their blocked funds. An investor applies to purchase shares offered in the IPO. If, for any reason, he later decides not to buy the share, he can easily do so. It must be noted that the IPO application can only be withdrawn before the issue’s closing date. Some investors withdraw their applications due to market sentiment or the grey market premium, which predicts the company’s likely listing profits. 

IPO Cancellation Rules for Different Investor Categories

A variety of investors, including retail investors, anchor investors, non-institutional investors, qualified institutional buyers, and others, apply for an initial public offering (IPO). The investor categories are listed below, along with the regulations governing their IPO application cancellation.

1. Qualified Institutional Buyer (QIB) – QIBs are considered institutional investors who have high capital and cannot cancel their IPO bid.

2. Non-Institutional Investors (NII) or High Net-worth Individuals (HNI) – These are investors who invest more than two lakhs in an IPO application. They cannot cancel their application, but they can modify their bid. However, they cannot lower their initial bid.

3. Retail Investors – This is the category of investor who invests less than INR 2 Lakh in an IPO. They can cancel or modify their bid any time before the closing period of the subscription.

4. Anchor Investors – This is a category of investors who can apply for the IPO before it gets open for the public, and they cannot cancel or withdraw their bid after the allotment of shares because the anchor investor increases confidence in the retail investors about the IPO.

5. Employee – Employees of a company launching an IPO can apply under the employee quota. If the application size is lower than two lakhs, then they can cancel and modify their applications at any time before the IPO closes.

Cancellation Process of IPO Application During the Subscription Period

One may withdraw their IPO application, although the procedure varies depending on the application method. 

Withdrawing Your IPO Application via ASBA

If you have applied through the ASBA process, then you need to follow the steps mentioned below-

1. Login to the mobile application through which you submitted your bid.

2. Go to the IPO section, and you will find the order book section.

3. Open the order book and click on the IPO in which you had made the bid.

4. There, you will find an option to withdraw or cancel your bid.

5. By confirming it, your process will be completed.

Withdrawing Your IPO Application via Non-ASBA

An investor can follow the below steps to cancel their IPO applications if they have applied for an IPO via non-ASBA method:

1. First, you need to log into the mobile app or the web platform provided by your stock broker.

2. You need to go to the IPO section and need to select the IPO application in which you want to withdraw your application.

3. You can choose the option to cancel or withdraw the bid.

4. Then, you can revoke the UPI mandate to complete the process.

How to Cancel Your IPO Application on the Pocketful App?

If you have applied for an IPO through Pocketful, then you need to follow the steps mentioned below to cancel your IPO application:

1. Log in to your mobile application with your user ID and password.

2. Then go to the IPO section.

3. Select the IPO in which you wish to withdraw your application.

4. There will be an option to cancel your bid; choose the option.

5. Confirmation will be required, and you need to submit it.

6. Your IPO application will be canceled.

Important Points to Keep While Canceling IPO Application

Before canceling an IPO application there are certain points one should keep in mind before canceling an IPO application-

1. While canceling an IPO application, nothing will be charged from the investor. Hence, there are no charges for canceling any IPO application.
2. The bidding process is processed only from 10 AM to 5 PM. Hence, you can cancel your application during this window.
3. It is suggested that you cancel your bid before the last day, as it may be more stringent on the last day of the issue.
4. The money blocked in your account might take some time to get back to your bank account as it depends from bank to bank.

Reason to Cancel an IPO application

There are various reasons why an investor cancels an IPO application; the major reasons are mentioned below:

• Market Conditions – If there are sudden changes in market conditions or an increase in volatility in the market, because of this, sometimes the investor cancels their application to avoid loss in IPO.
• Negative News – Sometimes, the discovery of financial irregularities, legal issues of the company, and weak financial performance will make an investor cancel their IPO application.
• Valuation – Sometime after the application made by the investor, they came to realize that the IPO was overvalued, which led to the cancellation of applications by the investors.
• Under Subscription – Low demand for the IPO will decrease confidence among the investors, forcing them to cancel their applications.
• Peer Comparison – When comparing the company’s performance with its peers, it will result in the cancellation of IPO applications by the investors.

Read Also: Why Invest in an IPO and its Benefits?

Conclusion

In conclusion, there are no fees if you choose to withdraw your IPO application prior to allocation, and the cancellation process is now completed online, making it simple for investors of all stripes. However, before withdrawing the application, you as an investor must weigh all the facts; your choice should be well-reasoned rather than hasty. But before investing in IPOs, one needs to think about their risk tolerance. 

Frequently Asked Questions (FAQs)