IPO or Initial Public Offering is the process through which a private company goes public by offering its shares to the public for the first time. The name of the Company gets listed on stock exchange. It can be a new company or an old company that thinks of going public by selling its shares. Reasons for raising IPO by companies: Raise funds for expansion of its business and services, invest in infrastructure or repay loans etc. Increase liquidity Adds to its credibility Open new doors for mergers and acquisitions As an investor, you should keep in mind the following points while putting your money in an IPO: Check the Red Herring prospectus for the IPO details and fund utilisation plans. Be cautious and go through the fine prints before putting money. Analyse the credit background and company's financial performance. You don't have to become a financial expert. Just get a brief idea of the basics to make yourself financially aware of where you are investing your money.