Can I Modify or Cancel an IPO Bid?

Yes, you can modify or cancel your IPO bid—if you meet certain criteria. Investing in an Initial Public Offering (IPO) is a major financial decision, but sometimes circumstances change, and you may need to reconsider your investment. Whether due to market shifts, new company information, or personal financial adjustments, you might find yourself wanting to alter or withdraw your IPO application. While the process is fairly straightforward for some investors, it depends on the category you fall into. In this article, we’ll guide you through the steps, charges, and timing for cancelling an IPO bid. But first, let’s see how to cancel an IPO application.

Key Highlights

• IPO bids can be modified or cancelled before the issue closes, depending on your investor category.

• Retail investors have the flexibility to withdraw or alter their IPO bids, while QIBs and NIIs face more restrictions.

• There are no charges for cancelling an IPO application, but be aware of bank-specific timing restrictions.

• Market conditions, liquidity issues, or changes in investment strategy are common reasons for cancelling an IPO bid.

IPO Cancellation Process

Here’s how to cancel an IPO bid if you fall into any of the investor categories that can cancel the bid before the IPO closes. The procedure varies based on whether you applied using an ASBA or non-ASBA mode.

Steps for Withdrawing your IPO Application if You Chose the ASBA Option

If you had chosen to go via the Application Supported by Blocked Amount (ASBA) channel, here is how you can cancel your bid. 

Step 1. Log into your Internet banking portal or the trading app through which you submitted your bid.

Step 2. Click on the IPO tab and open the ‘Order Book’ section.

Step 3. Identify the transaction ID for your IPO bid.

Step 4. Select the option to ‘Withdraw Application/Cancel Bid/Delete Bid’.

Step 5. Confirm this transaction to complete the process.

Steps for Withdrawing your IPO Application if You Chose the Non-ASBA Option

If you submitted a non-ASBA application, you can follow the steps outlined below to complete the cancellation process. 

Step 1. Access the broker’s IPO application through its mobile app or website.

Step 2. Visit the IPO tab and find the IPO application that you want to cancel.

Step 3. Click on the option to cancel or withdraw your bid.

Step 4. Reject or revoke the UPI mandate. 

Note: After the mandate expires, some banks release or unblock the cash. Therefore, find out from your bank or broker if a manual revocation is necessary to release the funds following cancellation.

IPO Cancellation Rules for Different Investor Categories

Your ability to withdraw an IPO application before the allotment is mostly determined by the investor category in which you fall. This is how the cancellation policies apply to various categories of investors. 

1. Qualified Institutional Buyer (QIB):

Institutional investors who command high levels of capital.

Rules for Cancelling an IPO Application: They cannot cancel their IPO bid.

2. Non-Institutional Investors (NII) like High-Net-Worth Individuals: 

Non-institutional investors in the HNI category who invest over ₹2 lakh in the issue.

Rules for Cancelling an IPO Application: They cannot cancel their IPO bid but can modify it. However, modifications that lower the bid are not permitted.

3. Retail Investors

Individual investors who invest less than ₹2 lakh in the issue.

Rules for Cancelling an IPO Application: They can cancel or modify the application at any time before the close of the subscription period.

4. Employees

Employees of the company who invest in the IPO.

Rules for Cancelling an IPO Application: They can cancel or modify the application at any time before the IPO closes (if the investment value is below ₹2 lakh).

5. Shareholders

Existing shareholders of the company who also want to invest in more shares via the IPO.

Rules for Cancelling an IPO Application: They can cancel or modify the application at any time before the IPO closes (if the investment value is below ₹2 lakh).

IPO Cancellation Charges

When an IPO application is cancelled, no fees will be charged by any bank or broker. Using ASBA or UPI, there are no costs associated with withdrawing an IPO bid. This makes cancelling a bid a straightforward and cost-free process for investors.

IPO Cancellation Timings

An IPO may be cancelled online at any moment while subscriptions are still being accepted. The option to ‘Cancel’ or ‘Withdraw’ is only displayed after the IPO application has been successfully submitted. Get in touch with the bank or broker where you would have submitted your IPO application if you are unable to find the cancel option online.

The exchange IPO bidding window is open from 10 AM to 5 PM. However, many brokers/banks offer the opportunity to submit IPO applications after 5:00 p.m., except on the last day of the subscription period.

Important Things to Know About Cancelling an IPO Application

It’s one thing to know how to withdraw your IPO application. But in addition to this, there are a few other crucial things to know about backing out of an initial public offering (IPO). They include:

• The time limit for cancelling a bid on the last day of the issue may be more stringent. Not all banks/brokers may allow cancellation till 5 PM. They could close the window a little earlier to process the requests.
• The time limit for refunding the money debited, if any, varies from one bank to another. 
• You can also choose to modify your application instead of cancelling it altogether. 
• Some brokers have a specific time allotted for cancellation and modification requests.

Reasons for Cancelling an IPO Application

Investors may withdraw their IPO bid for a variety of reasons. Usually, one of the following factors could put you in this situation.

Negative News About Company: You might choose to withdraw your bid if any negative information about the company appears between the time you file your IPO application and the end of the subscription period. 

Concerns About Overvaluation: Ideally, you should evaluate a company’s value and perform a fundamental analysis before submitting an IPO application. However, if concerns about a company’s overvaluation arise after submitting your IPO application, you may want to reconsider your decision to participate in the offering.

Changes in Market Conditions: When an IPO is introduced during a period of high market volatility, there’s a good risk that the market will move significantly between the IPO opening and closure dates. These modifications could raise the risk attached to your current investments as well as the new ones. These new developments may also cause you to reconsider the IPO investment’s potential fit for your portfolio.

Liquidity Issues: You can experience liquidity problems as a result of triggers connected to the market or personal troubles. For example, you might have some of your money invested for the long term, or the asset you want to sell isn’t selling as quickly as you thought it would. These events may cause liquidity problems and cause you to reconsider whether participating in an IPO is feasible.

Change in Investment Strategy: The simple fact that your investing objectives and methods may have changed is another common reason for wanting to withdraw from an IPO bid.

IPO Application Modification

If an investor wants to modify the amount or quantity of their IPO bid, they can do so. Individual investors can modify their bids by increasing or decreasing them.QIBs and NIIs are only permitted to increase the number or price of their bids or to upsize their offers.

Investors may amend their IPO requests at any moment while the offering is still up for subscription, just like they can cancel. Investors should check with their broker or bank for any specific timings for submitting modification requests, even though the IPO window is open from 10 AM on the issue open date to 5 PM on the issue close date. This is especially important for the last day since not all banks or brokers permit modification until 5 PM.

You can modify IPO bids either online or offline. As soon as the bid is sent to the exchange, the online modification option becomes available.

Steps to modify IPO bid online:

Step 1. Login to the broking platform or your Internet banking account.

Step 2. Go to the IPO tab.

Step 3. Select the IPO application you want to modify.

Step 4. Click on the Modify Bid button.

Step 5. Modify the Bid quantity or bid price as you wish.

Step 6. Click on Confirm/Update to apply changes in the bid.

Step 7. Approve the updated UPI mandate. If there is an upward adjustment in an ASBA application, the additional sum is prohibited. If the adjustment is downward, the amount is unblocked after allocation.

Steps to modify IPO bid offline:

Step 1. Get the IPO modification/revision form from the exchange website or the closest broker/bank.

Step 2. Enter your name, address, phone number, email address, PAN, and DP information in the form.

Step 3. Enter the revised bid data as well as the previous bid data.

Step 4. Enter your ASBA account number/ UPI ID.

Step 5. Sign the form and submit the form to the intermediary through whom the original application was made.

Conclusion

Cancelling an IPO bid is a crucial option for investors who need to reassess their investment decisions. While the ability to withdraw or alter your bid depends largely on your investor category, knowing the process, associated charges, and timing is essential. By understanding these key aspects, you can make informed decisions and protect your financial interests. Always evaluate your reasons carefully before taking action, as a well-considered choice can significantly impact your overall investment strategy.

FAQs on Cancelling IPO Bid