What is IPO ? | How to Invest in IPO in India | BY INVEST THERAPY

What is an IPO? 

IPO or Initial Public Offering or Stock Market Launch is a type of public offering where the company sold their Shares for the First time to the Institutional Investors and retail investors or individual investors. In other words When Company Issues there Shares to the public for the First time Than it Called IPO. Meanwhile, it also allows individual investors to participate in the Offering.

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Why Company Offer IPO?

• When Ever Company Need money (To expand their business, Repay Loans, etc.) They Offer IPO. 
• When Company Listed their Shares on Stock Market it increases Liquidity. It opens door to employee stock ownership plans like stock options and other compensation plans.
• Shares listing on Stock Market means the Company Is going to the public. The company is gaining enough success to flash its name on the Stock Exchange. It increases Credibility and Pride For any Company.
• A public company can issue more stocks in a Demanding Market. So The company can issue IPO when they need Money.

How Company Launch IPO : 

• A company before it became a public Company they hire an Investment bank for handling the IPO.
• Company and the Investment bank work with the Financial Details of the IPO in the Underwriting Agreement.
• After that Investment Bank File Underwriting Agreement to Registration Statement To SEC (Securities and Exchange Commission).
• In the end, SEC Check and disclosed the information, and if everything found right SEC announce the date of launching IPO.
• After that Initial Prospectus Which contains Estimate price per share and other information related to IPO which is called "Draft and Red Hearing Document" is shared with the people who are involved in launching IPO.
• After that IPO was launch in his Fixed Price or Book Value.
• On the announcing date by SEC the application form and prospectus are made available to the public online and Offline.
• In the end When the IPO price has Finalized the Shareholders and the underwriters Decided that how many shares will every investor Receive.

In the below image you will Understand how Company Launches its IPO : 

How to Invest In IPO :

You can Invest In IPO With The Help Of Discount Broker. We already discussed Discount Broker In our Previous Post. You Can Read Our Previous Post By Clicking Below Link.

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If you have any queries or Suggestions than contact Us on (investtherapy@gmail.com