• An
IPO is referred to a flotation which a company proposes to the public in form
of shares. It is defined as he first sale by a private company to the public.
• This
is used by the new and medium sized firm that are looking for funds to grow and
expand their business.
"Mainly if we understand in an layman language an IPO is offer of first sale of share of the company"
Why
go public?
The
main reason for going public is to raise the good amount of cash through the
various financial avenues that are offered.
Besides
this the main factors are as follows:-
• Public co usually get better rates when
they issue debt due to icreased scrutiny.
• As long as there is market demand co can issue more stocks.
• Trading in open market means liquidity.
• Being public co can implement things like ownership plans which help to attract talent to the industry.
What
you should look before buying IPO
• Historical
record of the firm
• Promoters
and their liability
• Product
offered by the firm and their future goals
• Project
value and sponsor of the plans
• Productivity
of the estimates of the project
• Risk
involved in the project
Term’s
used in Ipo
•Primary
market
Primary
market is the market where the company offers its shares for the first time to
investors and subscribe them. This is done when shares are listed on the stock
exchange.
but
The
shares can be tranferred from one place to another this take
place In secondary market.
Process
of ipo
Secondary
market
•The secondary market is where investors
buy and sell securities(exchange)they already own.
It is what most people
typically think of as the “stock market”
BUT
Stocks
are also sold on the primary market when they are first issued.
Shares
are the most common security in the secondary market
but other securities are also traded
Investment
banks and individual investors also buy and sell mutual fund & bonds on
this market.
Fannie
mae
and freddie mac also purchases mortgage on a
secondary market.
Primary
vs
secondary market
• When
co. issues securities for the first time and sell these securities directly to
the investors that transaction occurs on the primary market.
• If
these intial investors later decide to sell their
shares in the company then they can do so on the secondary market transaction in secondary market deals
with the buyer and the seller nor with the company .
i hope you understand if you have any query or any question ping me in comments i will help you out everytime.
Comments
Post a Comment