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Initial Public Offering (IPO)
Also referred to simply as a 'public offering', an IPO is the first sale of stock
by a private company to the public. An
IPO is a way for a company to raise money from investors for its future
projects and get listed on the Stock Exchange. From an investor's point of view,
an IPO provides a chance
to buy stocks directly from the company at the price of their choice (In book build
IPO's). Although an IPO offers more control over the price at which the investor
is willing to buy the stock, it is no less risky than buying a stock in the market.
From a company's prospective, the single most important use of an IPO is the provision
of funds. IPOs provide capital for the company's future growth or for paying its
previous borrowings and allows the company's stock to be traded publicly in the
Stock Market.
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