Easy IPOs: just dial to apply

INVESTMENT

The Rs 5,000-odd crore National Thermal Power Corporation initial public offering (IPO) has already been oversubscribed many times over and would attract far greater response if the queues of retail investors putting in their bids across the country are anything to go by.

But many like me almost decided to turn away after waiting for over 45 minutes in queue just to apply for 500 shares.

With a host of public offerings due in the next six months, do retail investors have an alternative to standing in long queues for a long time?

There is: Just dial 1600-22-2266, a toll free number (meaning there are no charges for making this call) to apply for any public offering, or to bid for a book-built issue or even modify an IPO application. Kotak Securities is offering this unique product to retail investors who need to just dial to make an application for any public issue.

Tomorrow, one could even utilise this novel feature and subscribe to rights issues. This means no more standing in queues, which have of late have become longer as not all banks accept IPO applications at every branch of theirs.

So retail investors could face the additional trouble of trying to find the bank branch that would accept his application form.

"We take care of everything right from filling out the form to sending the cheque and making the bid as desired. If an investor chooses to modify his bid in a book-built issue, he can easily do so at any time during the course of the issue," says D Kannan, chief operating officer, Kotak Securities.

So how does this all work and where is the catch? On calling Kotak Securities, the brokerage house will register your application, make you sign a power of attorney that would enable them to sign the form on your behalf.

An investor would need to open a depository account with Kotak Securities for an initial fee of Rs 550, which, says Kannan, can be set off against subsequent brokerage charges.

In addition, one needs to have an account in either Kotak Mahindra Bank, UTI Bank, HDFC Bank or Citibank, since Kotak Securities has tied up with these banks for the Internet payment gateway.

This enables retail investors to buy and sell stocks using their bank account for making payments. The power of attorney is limited to applying for IPOs, assures Kannan. It can also be extended to apply for rights issues at a subsequent date when the modalities are worked out.

A copy of the power of attorney needs to be produced every time Kotak Securities makes an application on behalf of its clients, attaching the same to the application form, which, incidentally, is filled out by the brokerage house.

"There is no risk involved since funds cannot be transferred or touched in any manner by the broking house," he adds.

Investors would need to transfer the funds from their bank accounts to kotakstreet.com and within that account to the IPO account through Internet.

Only the account holder can put in a bid by calling Kotak Securities since the brokerage house will first verify the identity of the account holder.

Over 30,000 customers are trading on the Internet with Kotak Securities today through kotakstreet.com. Since Kotak Securities launched its unique offering "" called Easy IPOs "" it has added 1,500 fresh accounts.

"All the conversations (when someone dials to make an application) are recorded so the trades can be audited," says Kannan. This is a safety feature for both the investor and the brokerage house in the event of any dispute.

Using the same service, one can also apply for mutual fund offerings as well. Over 6,000 customers have already used this facility to invest in NTPC.

While it is too late to use this unique product to apply for NTPC, one can certainly take advantage of the product when it comes to applying for the Rs 1,250-1,300 crore Punjab National Bank (PNB) hitting the market in November.