RHP IPO

RHP in the context of an IPO stands for Red Herring Prospectus. It is the updated and approved version of the draft offer document (DRHP) that a company files with SEBI and the stock exchanges after receiving SEBI’s clearance. The RHP includes the price band and issue timeline and is the document that governs the IPO subscription.

What Is the RHP in an IPO?

After SEBI reviews the DRHP and the company resolves all observations, the final pre-IPO document is filed as the RHP. Unlike the DRHP, the RHP includes:

– Confirmed price band (floor price and cap price)
– IPO open and close dates
– Lot size
– Allotment basis and reservation details
– Updated financial disclosures (if any time has passed since the DRHP)
– Any changes SEBI required

The RHP is the document filed with SEBI through Form 2 and is made available to investors on the company website, stock exchange websites, and financial portals.

RHP vs Prospectus

The RHP does not have the final issue price (just the band). After the IPO closes and the final price is determined through book building, the company files the Final Prospectus with the actual price. The Final Prospectus supersedes the RHP.

Documents Flow in an IPO

1. DRHP filed with SEBI (no price)
2. SEBI reviews and grants observations
3. RHP filed with stock exchanges and SEBI (price band added)
4. IPO opens for subscription
5. IPO closes; final price determined
6. Final Prospectus filed (actual price added)

Practical Example

Deepak is researching an upcoming IPO. He downloads the RHP from the NSE website and reads the price band (Rs 280 to Rs 300), lot size (50 shares), and the use of proceeds section. He also checks the risk factors updated since the DRHP. Based on his analysis, he decides to apply at cut-off price.

Key Takeaways

– RHP is the SEBI-approved offer document that includes the price band and IPO timeline
– Filed after SEBI’s review of the DRHP and before the IPO subscription opens
– Contains all material disclosures needed for investor decision making
– Investors should read the RHP risk factors before applying
– The Final Prospectus, filed after the IPO closes, includes the final issue price and supersedes the RHP