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What is an Initial Public Offering (IPO)? August 01 2017Initial Public Offering

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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

Initial Public 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 public.

Small young 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 publicly traded.

The investors 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 as follows:

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.

Indira 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.

 

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https://www.bseipf.com/investors_education.html
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