What is an IPO or Initial Public Offering?
Harleen last edited by Harleen
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.