Initial Public Offering

An initial public offering (IPO) is a process by which a privately-owned or non-listed company raises fund by way of offering shares to both institutional and retail investors. After the IPO, the company gets listed on the stock exchange. There are two types of IPOs—fixed price IPOs, and book-building process IPOs. In a fixed price IPO, the company’s financials are evaluated by the company and its appointed underwriters. In a book-building issue, there is no fixed price, but a price range. There are types of issues too. First, offer for sale is a mechanism by which a promoter or anyone who holds at least 10 per cent stake in the company sells his shares to investors. Second, fresh issue of shares, where a company issues new equity shares to investors. How Does IPO Subscription Process Work? The application for an IPO needs to be made through a bidding process, which...