What is an IPO or Initial Public Offering?

  • 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.


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