IPO

INITIAL PUBLIC OFFER

IPO.
What is IPO in simple terms ?

What is IPO in simple terms ?

 

An unlisted company (A company which is not listed on NSE, BSE) announces initial public offering (IPO) when it decides to raise funds through sale of securities or shares for the first time to the general public. In other words, IPO is the selling of securities to the public in the primary market.

 

Different investor categories for IPOs :

  • Qualified Institutional Buyers (QIBs).
  • Non Institutional Investors (NIIs).
  • Retail Individual Investors (RIIs).
Benefits from IPO ?

Benefits from IPO ?

Listing gains:- The reasons behind investing in an IPO may vary from investor to investor. While some may be eyeing short-term, attractive returns via possible listing gains, other may be in it for the long haul. The strategy of investment also depends on the financial goals and risk appetite of a person.

 

High Returns:- If listed company is profitable and investors are willing to invest with high subscription, same usually translates into higher listing than issue price on listing day itself. For long term investors, it is important to identify company that can offer higher returns over 5 to 10 years down the line.

IPO Advantages for listed company :

IPO Advantages for listed company :

  • IPO allows companies to raise capital by selling shares. Moreover, companies don’t have to repay the capital raised through the issuance of IPO.
  • Increase the company’s exposure, prestige, which can help the company’s sales and profits.
  • By getting listed on a stock exchange business receives wide public attention enhancing company’s visibility and recognition of its products and services.
  • Listed company can retire debt through the IPO or subsequent share offerings to reduce borrowed capital costs and improve their debt to equity ratio.