All about Initial Public Offering(IPO) in Share Market - goCareer

All about Initial Public Offering(IPO) in Share Market

IPO stands for Initial Public Offerings, IPO is an acronym. Initial Public Offerings is a process by which a company(private or government) go public for the first time with the sale of its stock(share) to the general public.

All about Initial Public Offering(IPO) in Share Market

As every company big or small needs money to grow, they do this by borrowing or by issuing shares. If the company decides to opt for the second way to collect money it is called Initial Public Offerings.

The company which is offering its stock to sale is called 'issuer'. The offering of stock is done by the help of investment bank. Once IPO got listed then company`s share trade in the open market. While the shares trade in the open market, money passes between public investors.

How IPO Works?
IPOs process is regulated by the Securities and Exchange Board of India (SEBI). If a company wants to issue shares through IPO than first company have to register with SEBI.
Once SEBI approved the company for IPO then company decides the price of IPO and the number of shares plans to issue.

Why a Company Go Public?
There are many reasons for a company to go public-

  • When a company needs money or want to raise money for company`s growth or for paying debts then generally IPO is the best choice.
  • IPO enables cheaper access to capital
  • IPO increase exposure, prestige, and public image of the company.
What is The Role of Bank in IPO?
When a company goes for issue a new IPO, Company needs bank as investor which serves multiple purposes-
  • The bank works as a financial adviser for the company.
  • The bank helps in the underwriting of the new issue of stock.
With this bank plays many more roles.

How to Invest in an IPO as an Investor?
One who wants to invest in the IPO must have a Demat account with a broker. One who has a Demat account have to fill a form with full details after this IPO will be allotted by lottery. 

All about Initial Public Offering(IPO) in Share Market All about Initial Public Offering(IPO) in Share Market Reviewed by NC on Monday, July 10, 2017 Rating: 5
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