IPO-Initial Public Offering

IPO Full-Form!

IPO means Initial Public Offering, it’s a process in which a company can go public by selling its equity to the public.


What is IPO?

IPO is a process in which a private company can go public by selling its equity to institutional investors and retail investors (individual). An IPO is processed by one or more investment banks, who arrange for the shares to be listed on the stock exchange. IPO can be used to raise money for companies.


Advantages of IPO

  • Diversifying equity
  • Cheaper access to capital
  • Increasing public image
  • Better management through liquid equity participation
  • Financial opportunities like equity, convertible debt, bank loans

Disadvantages

  • Legal, accounting and marketing costs
  • Disclose financial and business information
  • Risk of funding will not be raised
  • Loss of control due to new shareholders

 

IPO Process

  1. Hire an Investment Bank
  2. Register with SEC (Securities and Exchange Commission)
  3. DRHP (Draft Red Herring Prospectus)
  4.  IPO is priced
  5. Available for public
  6. Listing 

IPO Investment

Investing in IPO is a good idea but investing in every IPO is not good. IPO is a good platform for beginner investors, this is a good platform for them to make an entry into the market. IPO allows you to invest in the early stage of the company after listing, lots of people buy IPO for listing gains.


Conclusion

IPO means initial public offering, it’s a process of raise funding from the public by selling equity to institutional investors and the general public. There are some advantages and disadvantages of IPO for a company as per the above points, investing in IPO can give you a handsome return due to the early stage of listing or listing gains.


Comments

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