DRHP
DRHP is a preliminary document filed by a company with SEBI before launching an IPO.
Draft Red Herring Prospectus (DRHP) is the first official document that a company submits to SEBI when it plans to raise money through an IPO.
This document contains detailed information about the company, helping investors understand the business before investing.
It usually includes:
Company’s financial details
Business model and future plans
Risks involved in the business
Industry overview
Investors can use the DRHP to study the company and decide whether they want to invest in the IPO.
After submission, SEBI reviews the DRHP and may suggest changes. Once approved, the company can move forward with the IPO.
A DRHP is generally valid for 12 months from the date of receiving SEBI’s final observation. If the IPO is not launched within this period, the company may need to file again.
Example:
If a company plans to launch an IPO, it first files a DRHP with SEBI containing all important details. Investors can read this document to understand the company before the IPO opens.