TOPIC
IPO
An Initial Public Offering (IPO) is when a business realizes it is now ready to leave the private world and start operating in the public domain. The business floats its shares with retail investors for the first time and lists its shares on stock exchanges. In other words, it is that stage when a business gives its citizens a chance to be co-shareholders.
Companies normally undertake an IPO as a means of raising new funds. This money can be utilized for expanding the firm’s activities or for repaying a loan. Undertaking an IPO makes it possible for the initial investors, founders, private equity firms, or the venture capital firms to realise some gains after investing time and money for many years.
Even so, going public does not happen quickly. Months of preparation ensue. Organizations team up with investment banks to determine the number of shares to offer and the price at which to offer them. They are also required to reveal their financial and business details to the oversight authority and point out the risks involved as clearly and precisely as the opportunities.
Most IPOs now involve a book-building process whereby bids are made in a fixed price range.Retail investors can bid via their demat accounts for a limited period of three days.
The process completed, shares are allocated, and finally a company is listed on the stock exchange. The listing day can create quite a buzz, with volatility expected as stocks respond to demand and sentiment.
Fast profits can be made from an IPO, but an IPO is no sure winner. What can make all the difference is looking beyond the fanfare and learning about the enterprise itself.
In the end, a major transition occurs with the IPO, from being private and ambitions to public and accountable.
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