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

IPO party going strong, shrugs off bond jitters; MTAR IPO subscribed 200x
Meanwhile, shares of agro chemical company Heranba Industries rose about 50 per cent on debut| March 06, 2021, Saturday
Policybazaar IPO in 12-15 mos; parent firm gets boost from Bay Capital
Leading online insurance policy aggregator Policybazaar.com has got a capital boost from investment management firm Bay Capital, ...| March 03, 2021, Wednesday
Is MTAR Tech IPO worth subscribing? All you wanted to know
The company looks to raise up to Rs 596.41 crore via a combination of fresh issue of shares worth Rs 123.51 crore and an offer ...| March 02, 2021, Tuesday
RailTel: Analysts expect shares to list at 16-18% premium over issue price
The IPO by RailTel Corporation had witnessed a robust response from market participants and was subscribed 42 times| February 25, 2021, Thursday
Sebi's new free float norms and what it means for LIC IPO: Explained
Why are free float shares important? What is the free float requirement for newly listed companies? How and who will the Sebi ...| February 18, 2021, Thursday
Lodha Developers files draft papers with SEBI for Rs 2,500-cr IPO
The firm has revived its IPO plan for the third time| February 17, 2021, Wednesday
Threat to BSNL, tepid listing gains: Analysts' take on RailTel IPO
Listen to this podcast to know what Ambareesh Baliga, an independent market analyst; and Likhita Chepa, senior research analyst ...| February 16, 2021, Tuesday
Brookfield India REIT sees tepid listing, debuts at Rs 279 per share
The initial public offer by Brookfield REIT got subscribed 8 times on the final day of subscription| February 16, 2021, Tuesday
RailTel IPO opens for subscription today. Should you subscribe?
Half of the issue is reserved for qualified institutional buyers, 35 per cent for retail investors, and 15 per cent for ...| February 15, 2021, Monday
Top headlines: 10 Indian startups may get $10 bn in IPO, IBC set to resume
Bitcoin reached a new record on Sunday, rising above $49,000 for the first time. Read Business Standard's top stories here| February 15, 2021, Monday