IPO process explained

Simon BrownETF Blog, Latest

The new Satrix India ETF is currently in Initial Public Offering (IPO) and many readers have asked about the process and benefits of partaking in the IPO.


You don’t pay any fees, so you save on transaction costs when applying. You will still pay the total expense ratio (TER) and transaction costs when you sell.


There will be a last day to apply and then a listing date. Make sure you get your application in before the last date and you will need to have the cash in your brokerage account.


The listing price of the ETF is not known when you apply as it will only be determined just ahead of the listing date. The price will however be based on the underlying index the ETF is tracking.


As ETFs are open-ended they can issue as many as needed so you will get the full allocation that you requested.

How to apply

Your broker will offer the IPO to you and you’ll need to have the required funds in order to apply.

Tax-free accounts

You’re not able to apply for an IPO via a tax-free account.

Stock IPO

When a share is listed the IPO process is different. Firstly the price will be set so you know exactly what you’ll pay. Secondly, you may not receive your full allocation if demand exceeds supply. Thirdly, on listing the price may rally higher (or collapse) depending on demand both during the IPO and at listing.

In short, if you like the ETF and plan to buy it, then buy in the IPO.

ETF blog


At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.