WHAT IS IPO

IPO

An unlisted company (A company which is not listed on the stock exchange) announces initial public offering (IPO) when it decides to raise funds through sale of securities or shares for the first time to the public. In other words, IPO is the selling of securities to the public in the primary market. A primary market deals with new securities being issued for the first time. After listing on the stock exchange, the company becomes a publicly-traded company and the shares of the firm can be traded freely in the open market.

The company which issues shares to the public is referred to as the issuer. There are two common types of IPO.

Fixed Price Offering

Fixed Price IPO can be referred to as the issue price that some companies set for the initial sale of their shares.

Book Building Offering

In the case of book building, the company initiating an IPO offers a 20% price band on the stocks to the investors. The interested investors bid on the shares before the final price is decided.

IPO is used by small and medium enterprises, startups and other new companies to expand, improve their existing business. An IPO is a way for companies to acquire fresh capital, which in turn can be used to finance research, fund capital expenditure, reduce debt and explore other opportunities. An IPO will also bring in transparency into affairs of the company since it will be required to inform financial numbers and other market-related developments on time to the stock exchanges. The company's investment in various equity and bond instruments will come under greater scrutiny after it gets listed. IPO of any company brings great deal of attention and credibility. Analysts around the world report on investment decisions of the clients.

Investing in an IPO:

Investors betting on an IPO can earn handsome returns if they are wise and have some expertise. The investors can form a choice by going through the prospectus of the companies initiating IPO. They need to go through the IPO prospectus carefully to form an informed idea about the company’s business plan and its purpose for raising stocks in the market. However, one must be watchful and have a clear understanding of analysing financial metrics in order to identify the opportunities.

IPO NEWS

Jack Ma's Ant Group seeks to raise $35 billion in biggest-ever IPO
The company's much-anticipated IPO is on track to surpass Saudi Aramco's $29 billion sale last year| October 26, 2020, Monday
Ant Group lures Fidelity, T Rowe Price, UBS Asset for a piece of its IPO
Jack Ma's Chinese fintech giant is one of the most hotly anticipated IPOs in years, on course to make history by surpassing Saudi ...| October 23, 2020, Friday
IPO drought ends in Pakistan's stock market with record year ahead
The nation has posted the fastest equity rally in Asia since March, and will host about 10 IPOs in the fiscal yr to June 2021| October 22, 2020, Thursday
Will the IPO everyone is waiting for come this year? Find out LIC 'plans'
In this podcast, Business Standard's Shrimi Choudhary discusses what has been done so far in the LIC IPO, what needs to be done ...| October 19, 2020, Monday
Equitas Small Finance Bank IPO: Near-term risks may limit listing gains
The shares of Equitas Small Finance Bank IPO will be available in the lots of 450 and the price band has been fixed between Rs 32 ...| October 19, 2020, Monday
Equitas Small Finance Bank fixes IPO price band at Rs 32-33 an equity share
Equitas Small Finance Bank on Thursday fixed the price band for its over Rs 500 crore initial public offering (IPO) at Rs 32-Rs ...| October 15, 2020, Thursday
Equitas SFB prunes IPO size by half to Rs 518 cr, issue opens Oct 20
Price band fixed at Rs 32-33 a share; promoter stake to drop to 82-83% from 95.49% currently| October 15, 2020, Thursday
UTI AMC IPO: Check your allotment status here
UTI AMC IPO was subscribed 2.3 times, that is, it received bids for 6.31 crore equity shares as compared to the issue size of ...| October 06, 2020, Tuesday
Mazagon Dock IPO subscribed 157 times on third day; UTI AMC IPO 2.31 times
The last hugely subscribed PSU IPO was that of IRCTC last year| October 01, 2020, Thursday
Sebi extends relaxation on validity of nod to launch IPO, rights issue
The move comes following representations from the industry, the Securities and Exchange Board of India said in a circular| September 29, 2020, Tuesday