What is an Initial Public Offering (IPO)?
In today’s world
stock market is among the hottest investment avenues. More and more people are
looking for opportunities to make more returns in the stock market. One of the attractive
ways to invest in stock markets is
through the Initial Public Offering (IPO). In this article, we shall learn
about the basics on IPO.
Meaning of Initial Public Offering
Offering is an arrangement in which the private company offers its shares to
the public for the first time. With this arrangement,
a private company becomes a public company. In this process, the company sells
its shares to the institutional investors who later sell the shares to the
companies as well as large privately owned companies issue IPOs. Small companies issue IPO to seek
additional capital required for expansion. Large companies issue IPO to become
are always keen on applying for the new IPO application. The reason being,
multiple gains can be made on the listing
of the shares on the stock exchanges. Also, those investors looking to make
long term investments seek to invest in IPOs of good company. There are certain
points that an investor needs to keep in mind while investing in IPO, they are
Points to Keep in Mind While Investing in an IPO:
· Read and understand the
prospectus of the company in detail.
· Be cautious when all the
brokerage firms are giving a buy call. Do your own analysis as well.
· Check the lock in the period between the underwriters and the
insiders of the company.
· Seek more details about the
company on the internet. Check its
competitors, past performance and
expected future growth.
· Invest in a company that has strong underwriters. Good
underwriters or brokerage firms bring credibility to the IPO.
By reading the
above points one thing should be very clear that an investor should never apply
for an IPO blindly. It is difficult to select and pick the right company for
investment. By following few basic steps you can understand the company’s
profile and determine whether the IPO application for the company needs to be
filled or not.
Securities is a leading financial service providing company. Our clients can
apply for IPO of a company through their trading account. We provide guidance
and outlook on the company’s IPO. We help our clients in deciding whether the IPO
application should be filed or not. We
ensure that our clients are well informed when the new IPO comes in the market.
Open a demat account with us and avail our valuable services. For any information or query contact us via
call or email.