Initial Public Offering (IPO)

Initial Public Offering (IPO) means company will be listed for the first time in the stock exchange. Public can purchase the share of the company by investing in the IPO of the company. In IPO campany may sell its existing share or can freshly issue new share. By IPO company can get funds which is needed to run the business which company may use that fund for the working capital or Purchase new assets. For the IPO company will appoint the merchant bankers to look the process of IPO. If the more people bid for the IPO it will be called as oversubscribed and if less people bid it will be under subscribed. A ipo should not to be under subscribed. A ipo need to raise more than 90% of total issue. So to get rid of this risk company will appoint underwriters, who will purchase the share if if the ipo was under subscribed. Company will give time to subscribe for bid for share, people need bid for share from their demat account. Within few days share will come to demat account later it will be listed in stock exchange where it can publically purchased and sold.