So, you’re thinking about investing in an IPO, huh? That’s great! You need to understand the key difference between RHP and DRHP, before you decide which one to read.
In this article, we’ll break down the difference between RHP and DRHP in a way that’s easy to understand.
- Name: RHP stands for Red Herring Prospectus, while DRHP stands for Draft Red Herring Prospectus.
- Purpose: The RHP is a final prospectus that is filed with the Securities and Exchange Board of India (SEBI) before an initial public offering (IPO). The DRHP is a preliminary version of the RHP that is used to gauge investor interest in the IPO.
- Content: The RHP contains all of the information that investors need to know about the company, including its financial statements, business operations, and risk factors. The DRHP contains a similar level of detail, but it does not include the final price of the shares or the issue size.
- Status: The RHP is an official document that is filed with SEBI. The DRHP is not an official document, but it is used to gather feedback from investors before the RHP is filed.
Table that summarises the key difference between RHP and DRHP:
| Feature | RHP | DRHP |
|---|---|---|
| Name | Red Herring Prospectus | Draft Red Herring Prospectus |
| Purpose | Filed with SEBI before an IPO | Used to gauge investor interest in an IPO |
| Content | All information that investors need to know about the company | Similar level of detail as RHP, but does not include final price or issue size |
| Status | Official document | Not an official document |
So, what’s the difference?
The main difference between the RHP and the DRHP is that the DRHP does not include the final price of the shares or the issue size. This is because these details are not yet finalised when the DRHP is filed.
I hope this helps understand the key differences between RHP and DRHP.
P.S. If you’re ever feeling overwhelmed by all the financial jargon, just remember that you’re not alone. Even experienced investors get confused sometimes. The important thing is to ask questions and learn as much as you can.